Indian telco regulator expects sector to 'merge or die'

Despite raising tariffs to improve their margins, the country's 10 telcos are expected to see consolidation over the next year, according to TRAI chairman.

India's telecom industry is set for consolidation over the next year despite its improving finances, according to the Telecom Regulatory Authority of India (TRAI)

Companies will be forced to "merge or die", TRAI chairman Rahul Khullar told The Hindu Business Line in a report on Monday.

Indian's telco sector will "merge or die".

"I have always maintained this. In other markets, there are not more than three to four players so why should India have 10?" Khullar told the news outlet.

This would come despite expectations that telco's bottom lines will improve. "We have sorted out many issues. Industry finances are improving. By the year-end, you will start seeing everybody's EBITDA margins and average revenue per user going up," said the chairman.
Indian mobile subscriber growth plateaued at the end of last year, according to the most recent TRAI figures. In Q4 2012 the number of GSM subscribers was 786.64 million, less than a percent higher than the corresponding period the previous year.
In early May, two of India's biggest telcos, Airtel and Reliance, raised their mobile charges to drive up the average amount spent by each subscriber. The trend is expected to play out across the industry this year.
Just weeks before, Airtel reported that its 2012 annual profit  of US$414 million was 50 percent lower than the previous year.


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