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India allows telcos to be fully foreign-owned

In a move that could raise domestic competition and push local telcos to further venture abroad, the government has formally relaxed regulations for foreign investors in India.
Written by Nitin Puri, Contributor

The previous limit of foreign ownership over mobile operators was capped at 74 percent, whicih did not deter the likes of Vodafone, Telenor, and Sistema, to set up joint ventures. Now, the Indian government is relaxing regulations, in another attempt to increase foreign direct investment (FDI) into India, and allowing 100 per cent foreign ownership, as reported by ITWorld.com.


Some of these foreign companies may buy out their joint ventures for full ownership and control, but it is unlikely that any new telecom operators will enter the Indian market at the moment as India needs to overhaul its taxation laws to attract new entrants. On the flipside, this simply might invite entrants to set up even more joint ventures within India, as many of the Indian telecom operators are debt ridden at the moment.

In the short term, I wouldn't expect consumers to notice any differences. However, in time this could lead to new roaming agreements with more international carriers, at reduced rates, as some of these carriers could already have an investment with the Indian telecom operator.

Eventually, I wouldn't be surprised to see international operators such as O2 from the U.K. and Verizon from the U.S., and even Rogers from Canada, to have some presence in India.

The main reason why I would expect to see the above carriers, or others, from the countries listed above is because of the large Indian diasporas living in those areas. Brand recognition is one way to attract new customers and those who have lived abroad and come back to India, or vice versa, would already know who these telecom operators are. Furthermore, this could lead to special packages and rates for voice calls and SMS messages between India and foreign countries.

Already, Indian telecom operators are making their presence felt outside of India, as Airtel takes the lead in this segment. It is available in neighboring in Bangladesh and Sri Lanka, 18 countries across Africa, but unfortunately not in Pakistan. In fact, Airtel is the fourth biggest mobile operator in the world, and is already reaching out to the Indian diasporas, instead of the other way around.

Personally, I would not be surprised if Airtel were to eventually enter Europe and then North America, but perhaps only after a telco from one of those regions enters India first. 

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