Armed with acceptable quantum of liberal Spectrum in 900Mhz band and 2100Mhz band, Airtel, Vodafone & Idea Cellular – the Incumbents Lobby have gotten far more aggressive than they reveal it on the Analyst Call. I had an opportunity to speak to Infratel & Indus Tower Executive from which I gather A-Vo-Id group is cautiously watching the Reliance Jio telecom saga unfold.
3G data speed is hardly better than EDGE in India, and 3G coverage is still not ubiquitous, even in metro circles. Operators might need to make significant investments to make their networks data-ready, or data growth might not accelerate significantly. Data consumption is still in early stages in India and there is significant headroom for data growth, but the current infrastructure might not support the acceleration in data consumption.
Speed Matters The current data network does not support high-speed data usage. Data speed is a primary driver of data consumption growth, as subscribers are able to use higher amounts of data at the same time, and the better user experience motivates them to use more data. Most Indian 3G networks have an average speed of mere 1.2Mbps.
Scaling a 3G Mobile Data network is totally different from expanding the reach of 2G Voice network. As data consumption increases, operators need to incur incremental capex/opex to install more towers to maintain coverage. In India, tower companies undertake tower capex; hence, capex is lower, but opex is higher.
Network CAPEX a Must in at least Top 100 Towns & Cities
The quality gaps in India create an opportunity for an LTE-based new entrant to leverage LTE download capabilities to offer a superior-quality product to a high-end segment. Indian operators’ 3G Data network operating costs will increase reasonably as data consumption picks up. Revenues are unlikely to increase in line with network operating expenses at this point. India, like many emerging markets, has a quality conscious, relatively price inelastic customer segment that is unhappy with current quality levels; these highly profitable subscribers are likely to be the primary target market for Reliance Jio. 4G-LTE Data speed and quality are undoubtedly better than on 3G or EDGE. Hence, A-Vo-Id group has resorted to quietly scale their 3G data networks to give better experience to their existing customers and hold them back from switching to greenfield 4G operator who is likely to disrupt the market very soon.