Unlike developed markets, where introduction of newer technology had led to the phase out of older ones, India will continue to see strong growth in the low-end 2G segment for the next five years, brokerage house Credit Suisse says in a report based on an interaction with Bharti Airtel CEO Sanjay Kapoor. The Airtel boss told Credit Suisse that higher operating costs because of expensive spectrum would crimp many telecom operators ability to offer discounts.
Excerpts from the report on Kapoor's outlook for Airtel and the industry in general:
* Bharti focused on revenue market share, and will continue to invest in maintaining/consolidating its leadership position. Management is encouraged by initial results of this strategy.
* Rising regulatory costs (due to high spectrum cost) could drive consolidation ��" thus bringing rationality to competition. Recent 3G tariff cuts were largely driven by irrational competitive forces, as well as to induce usage.
* 2G/3G/4G to co-exist in Indian telecom sector for a long time-each technology required for a specific customer segment.
* Even after five years, a large number of Indians would still be using 2G feature phones (probably even 50% of the base) that require low-bandwidth applications.
* Smartphones could become popular with falling price points. These subscribers could use higher bandwidth applications like videos, photo transfers, which need 3G speeds.
* There will be a growing set of customers who would require really high speed connections (4G)-not for mobile phones-but for connecting their laptops/PCs/tablets.
* It would not make sense for content/application developers to build a pre-paid collection infrastructure in India when the operators have already done the same. Over time, content developers will have to tie up with (telecom) operators in India, who will then have greater control over the customer revenues.