Incumbent GSM giants such as Bharti Airtel and Vodafone are set to feel the heat of competition from mighty Reliance and Tata group in a scenario that could change the game in an industry seeing heady growth.
Tata Teleservices, a CDMA player, on Monday sought the Department of Telecommunications (DoT) permission to offer GSM-based mobile services across the country, signalling that the Indicom brand might directly challenge Airtel and the former Hutch.
The company is believed to have applied for GSM spectrum for 22 circles under its Unified Access Services Licence. The move followed last week’s move when CDMA player Reliance Communications received spectrum allocation for GSM services, triggering a wave of protest from the lobby that stands for Airtel, Vodafone, Idea Cellular etc.
“The allocation of GSM spectrum to RCOM in all 23 circles would be incrementally a negative for existing wireless operators, namely, Bharti Airtel, Vodafone Essar, Idea Cellular etc, as they would have competition from another pan-India GSM player,” Macquarie ResearcEquities said in a report.
While consumers could gain, the industry could change if Reliance, with its deep pockets and penchant for aggression, triggers a price war.
“To match the competitor’s price point, another player could reduce its prices till it becomes a vicious circle,” a research report by stock brokerage Prabhudas Lilladher (PL) said on Monday.
The market seemed to have taken notice. On a day when the Sensex held largely flat, Bharti Airtel’s stock fell by about 4 per cent, reversing the dizzy rise it shared with the Sensex last week before broader market concerns brought it down.
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