indian-price-war-puts-start-ups-at-risk

India’s fierce mobile pricing war has impacted all players in the market but there is evidence that the start-up operators are being disproportionately affected. Rolling out the new GSM networks has been relatively straightforward for R-Com and Tata Docomo as they already have infrastructure in place, but this has not been a luxury afforded to the start-ups.

As well as benefiting from economies of scale, the larger operators – notably market-leader Bharti - have been able to hone their business models to operate on tiny margins due to outsourcing and network optimisation.

ARPU is generally higher at the larger firms and they will also soon benefit from being able to offer 3G services (none of the new players won 3G spectrum in the auctions earlier this year). Exacerbating the problem further is the fact that many of the start-ups have attempted to build market share quickly via low cost pricing strategies, which has seen some report ARPU at barely over US$1 per month – less than half the Indian average (which is already among the lowest in the world).

With many of the foreign operators reportedly looking to exit the market unless conditions improve, the Indian authorities must act quickly to address the situation. Top of the agenda must be the relaxing of M&A regulations that will allow much-needed consolidation in India’s over-crowded mobile market.

 
indian-price-war-puts-start-ups-at-risk