Telecom Companies - India

1. Business Models had undergone a big transformation in the last 10 years.

2. Initially, the model was capital intensive. Now the model is asset light.

3. The players who have higher level of variable costs in their operations are able to achieve higher operating margins. The need for high capital is less on account of very high levels of outsourcing.

4. Higher variable cost provide a high level of flexibility in operations and helps in faster ramping up with minimum risk.

5. Now almost most of the operations relating to Telecom services are outsourced.

6. India had the highest tariffs in the world . Today India has the lowest tariffs in the world.

7. More than 95% of business was post paid and now about 95% of subscribers are pre paid ( where the risk of not collecting the dues is very less ).

8. Initially, the price competition in the sector was very low and operating margins were very high. Now the price competition is very high and operating margins are coming down.

9. The core business of Telecom services is not profitable. But services related to Telecom are profitable and players in the Eco system are operating profitably. Phone manufacturers, Content Providers, Tower owners, Networking managers, Telecom Retail, BPO providers and IT services providers are part of the Eco System today. The core business of voice is not profitable any more and it has to be supported by Data and other value added services.

10. Only a few companies in the world have most of the above services and those who have the above could look at synergies and leverage of synergies available within a group.

11. Going forward, only the leading players in the field and those who consolidate their operations will survive in the market.

12. The government's proposal to allow easy exit of players should facilitate the mergers and acquisitions and optimal use of spectrum.

13. To develop a robust business model, the companies have to develop host of Products , Services based on Telecom which will add lot of value to the Product portfolio and increase the revenue . The services could include TV on Mobile, Banking on Mobile, Mobile Data Services, use of cloud computing for operations, High speed wireless, High speed Broadband and whole host of data services through mobile.

14. Going forward, Telecom industry players will be competing with Banks, DTH, Cable Services in providing Banking and Entertainment services.

15. The companies in the sector have to tailor strategies in line with the developments in the Eco system, which would ensure a development of a competitive Strategy.