Ailing telecom sector: Idea Cellular's Kumar Mangalam Birla speaks up
Mumbai: Aditya Birla Group chairman Kumar Mangalam Birla while breaking his silence over India's ailing telecom sector has said in years to come only a few "fittest" mobile operators will survive in the business as according to him the price war is going to further escalate.
"The telecom sector is undergoing a very turbulent and difficult phase," Birla said in an interview this week. "Probably the fittest three will survive," business news portal Bloomberg quoted him as saying.
Birla's Idea Cellular will become largest telecom operator in India after merger with Vodafone India, British headquartered company's India arm. The unified entity as per a rough estimate will have some 400 million customers, a number much larger than incumbent market leader Bharti Airtel's which is over 225 million.
With players falling "like nine pins," Birla predicts that "the tariffs should stabilise at some point." It's still hard to say when prices will stop falling, and Idea won't rule out share sales or bond issues to raise funds, according to the Bloomberg report.
The Bloomberg Billionaires Index puts Birla's net worth at $8.2 billion.
The telecom sector has seen an aggressive price war raging among telecom operators since September last year when Reliance Industries led by India's richest person Mukesh Ambani launched its own telecom company Relaince Jio.
For the first six months or 180 days of its advent on India's telecom landscape, Jio offered free unlimited 4G data and made its free voice calling service from its network a lifetime windfall.
The aggressive pricing by Jio, as has been alleged, has caused huge revenue losses to incumbent players including Bharti Airtel, Idea Cellular and Vodafone that have taken up the issue with country's regulatory authorities. However, Jio in its defence has blamed the business model adopted by these companies as the real culprit.
