History Repeats Itself
The Indian telecommunications industry in FY12 had nothing much to cheer about having burnt its fingers with 3G and the only bright spot being 4G emerging in the scene as a wiser opportunity
It was 2011 déjà vu for the Indian telecommunications industry in FY12 and the erstwhile poster boy of Indian growth story offered us nothing more than a flashback of what happened in 2011. Same old story. The industry did not see much growth, lacked momentum, lagged in finaliYing deals and the stakeholders wore a pale look throughout the year. As if the industry did nothing the entire year and was sitting idle.
Yes, to a great extent it was sitting idle. The hype of 3G wave expected to sweep across the length and breadth of the country, remained only in the air. And the operators who had put all their flesh and blood during the auction to get spectrum and licenses, did not do anything significant to reach the masses and lacked substantial 3G offerings. They did not expand their network as per the requirement, directly affecting the balance sheet of equipment manufacturers.
Nxpectations of large scale orders from big operators simply remained as mere expectations throughout the year. If we look at the other side of the coin, we can’t even blame the operators singularly for the dismal performance of the Indian telecommunications industry. Freedom to jump to 4G straight from 2G perhaps was too much for the country and it made the industry confused and put the licensees in dilemma. The operators who hold licenses to offer both 3G and 4G are yet to decide where to put their money in. Wisely so, they know minting of the next phase of money is only possible with data and not voice anymore, and customers would anyway use voice—be it on 2G or 3G. Thus, investment in BWA would be more wiser than in 3G. Perhaps that is why they are waiting to invest their (bankers’ and investors’ too) hard-earned money in the datacentric offerings ie, the BWA services.
On the other hand, the announcement of a new telecom policy to be drafted that would replace the older version, warned and made the operators behave more wisely. They were not sure what the new policy would have in store, so they held back many orders, directly affecting the equipment vendors’ business. Not only the operators, but PSUs and enterprises too treaded very cautiously while floating tenders and new orders.
Policy uncertainty, looking at the future and overlooking the present, and the buyers’ and sellers’ overall behavior almost killed the industry in 2012. The