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Is Indian telecom industry heading for a monopoly?

Anil Ambani-owned Reliance Communications (RCom) had announced the acquisition of MTS’ holding company Sistema Shyam Teleservices Ltd. Even though RCom considers it as the first consolidation in the Indian telecom industry, economically it is not going to add much to its market share. MTS owns a meagre market share of 0.89 per cent with 8 million subscribers.  RCom holds 11.21 per cent with 134.90 million subscribers; Airtel has 23.52 per cent market share followed by Vodafone’s 18.90 per cent as well as Idea Cellular’s 16.53 per cent. But the acquisition offers a wider spectrum visibility. The deal will extend the validity of RCom’s spectrum in the 800 MHz and 850 MHz band in Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, Western Uttar Pradesh and West Bengal by a period of 12 years from 2021 till 2033.

The deal will add revenue of Rs 1500 crore to RCom. Mukesh Ambani’s Reliance Jio has also signed an agreement with RCom to use the latter’s extensive inter-city and intra-city infrastructure of nearly 520,000 km of optic fibre pairs. The aggregate value of the deal was estimated at Rs.12,000 crore.        

Vodafone has also proposed to invest around $9 billion in India thereby adding more cruxes to the competition. Telenor has also hinted an acquisition shortly. With competition among major service providers heating up, such purchases in larger terms would create oligarchies, thereby curbing a competitive business scenario and the smaller players could be forced to exit.

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