The Dangers of growth 

Addition of 11 million new subscribers (fixed as well as mobile) in FY 2002-03 was good news for the industry. However, the resultant growth of a mere 5 percent in terms of revenues of operators, was not all that good news. Also bear in mind the fact that cellular numbers grew by almost 100 percent, and their revenues grew by 50 percent. Considering that before competition set in, telecommunication costs in India were one of the highest in the world, we saw the anomaly getting corrected to a great extent last year. 

So what is the big picture? And where do we go from here?

First things first. Clearly, Indian telecom is gathering steam. But at the same time competition is also getting intense, leading to drops in prices and margins. This is the time for creating as conducive a business environment as possible. The Government must play its role to see that hurdles to business and market uncertainties are removed. The role of not just the Government, but the regulator is going to be very critical in days to come. And operators will need to spend quite a bit of their top management time dealing with policy issues. 

A lot of money is going to be needed to fund such growth in the coming years too. Surely, as operators will look at FDI and other sources of funds, the pressure on bottom-lines will only increase. In a pre-consolidation phase, there would not be too many betters on operators that do not have operating efficiencies. 

The race for numbers will have to be matched by race for quality of service. While we saw a great increase in the number of subscribers last year, there was a general perception that there was a decline in service quality. Operators, besides fighting and lobbying with the Government, will need to focus more on network expansion and quality, customer service, and modernization. Just connectivity will not help. Cost-effective value-added services are soon going to be the differentiator.

And the toughest challenge would be in planning for partnerships, as pressure on issues like intra-circle mergers and FDI limits in telecom start building up. These partnerships could be in the form of mergers and acquisitions or even cartels. 

The telecom services industry is embarking on a high growth path. But the journey is going to get tougher. That is what growing dangerously and the danger of growth is all about.