Telecommunication competition and its consequences

[fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_text]

Telecommunication competition and its consequences in India.

Point of Interconnections (PoIs); A Last resort

Ever since the launch of the latest sensation RELIANCE JIO in the Telecom Sector on 5th Sep 2016, there has been growing problems for the Mukesh Ambani led group. Top competitors AIRTEL, IDEA and VODAFONE have been violating license norms for not giving interconnection to Reliance Jio Infocomm. This resulted in an average of 12 Crore call drops between JIO and these networks ever day.

The TRAI (Telecom Regulatory Authority of India) called this “unacceptable” level of call failures. It also warned of the consequences Airtel, Idea and Vodafone would face if they do not give the necessary Point of Interconnections (PoIs) to JIO’s network. On 21st Oct 2016, TRAI suggested the Dept. of Telecom to levy Rs.3050 Crore penalty (Rs. 50 Crore per license service area) to the three networks after failing to adhere to the laws. It added that their acts appeared to be aimed at stifling competition and was against public interest.

[/fusion_text][/fusion_builder_column][fusion_builder_column type=”1_2″ last=”no” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_imageframe lightbox=”no” lightbox_image=”” style_type=”none” hover_type=”none” bordercolor=”” bordersize=”0px” borderradius=”0″ stylecolor=”” align=”none” link=”” linktarget=”_self” animation_type=”0″ animation_direction=”down” animation_speed=”0.1″ animation_offset=”” hide_on_mobile=”no” class=”” id=””] [/fusion_imageframe][/fusion_builder_column][fusion_builder_column type=”1_2″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_text]

How Reliance handle its competition?

Number one, cash is king…
Number two, communicate…
Number three, buy or bury the competition…

– Quote by Jack Welch on competition

[/fusion_text][/fusion_builder_column][fusion_builder_column type=”1_3″ last=”no” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_text]

How Bharti Airtel handle its competition?

So I think instead of focusing on the competition, focus on the customer.

– Quote by Scott Cook on competition

[/fusion_text][/fusion_builder_column][fusion_builder_column type=”2_3″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=””][fusion_imageframe lightbox=”no” lightbox_image=”” style_type=”none” hover_type=”none” bordercolor=”” bordersize=”0px” borderradius=”0″ stylecolor=”” align=”none” link=”” linktarget=”_self” animation_type=”0″ animation_direction=”down” animation_speed=”0.1″ animation_offset=”” hide_on_mobile=”no” class=”” id=””] [/fusion_imageframe][/fusion_builder_column][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][fusion_text]

How this would affect the stocks of the violators?

When JIO was unfolded in early September, the stocks of Airtel and Idea took a knockout punch as they shed around Rs. 15,600 Crore together in Market Capitalization. For RJio, it is predicted that it needs 75-80 million users in 2-3 years to break even.
Now again, if this penalty suggested by TRAI is levied it is sure to be big setback for the telecom big guns.
BHARTIARTL closed @ Rs. 310 and IDEA closed @ Rs. 80 respectively as on 21st Oct 2016.
IDEA was among the top 5 gainers of the day. But it’s unlikely to expect the same kind of close in the days to come if the penalty is implemented. Last year when there was a penalty for a similar call drops issue, shares of Idea Cellular declined by 3.24% BHARTIARTL was down 2.98%.
VODAFONE as of now does not have any direct listing in the Indian Stock Market. However, its IPO that was likely to hit the market in Apr-June 2017, will see the impact at the primary market.

[/fusion_text][fusion_separator style_type=”double solid” top_margin=”5″ bottom_margin=”5″ sep_color=”” border_size=”” icon=”fa-star” icon_circle=”” icon_circle_color=”” width=”” alignment=”center” class=”” id=””/][fusion_text]