Friday November 6, 04:04 AM

Source: Indian Express Finance

Massive reduction in tariffs is expected to generate profitability for telecom cos

By Preeti Parashar
While the telecom sector is well on its recovery path, the ongoing spectrum issue has deeply impacted consumers as well as the sector. Subodh Bhargava, chairman, Tata Communications and Wartsila India, talks about the telecom sector scenario and the technology development issues in an interview with FE s Preeti Parashar. Excerpt: How do you foresee the telecom sector performance in the next few months? Despite the economic slowdown hitting the telecom industry, all the players have been able to tackle the challenge positively. Though the sector is not at its peak but massive reduction in tariffs is expected to pump in profitability for the companies. The companies having established a strong rural network will benefit the most. Moreover, telecom players innovations will continue to boost vertical growth of the sector. I also believe that real growth lies in expanding the broadband network. What do you think about the spectrum allocation issue? The ongoing spectrum allocation issue is impacting the consumers as well as the telecom players adversely. Moreover, if confusion still prevails even after allocation of 3G spectrum, the government will lose on the valuations and the companies will lose out on the revenues. The government should be clear about allocating the spectrum so that the companies can decide about the tariffs. Do you see more mergers and acquisitions happening in the telecom sector? Yes. We can expect more mergers and acquisitions next year. Though the bigger players like Bharti, Reliance Communications (RCOM.NS : 166.6 -1.5), Tata Communications, Vodafone etc are on equal platform as far as mergers and acquisitions are concerned. So no major churns are expected at the large scale levels but we can anticipate such activities in smaller companies and the new entrants in the telecom sector. As a member of the technology development board where do you think India is positioned in terms of indigenous technology? I think that the Indian industry should focus on technology to partner with international companies. The focus should be on R&D, infrastructure and more resources at disposal. Though progress has been made in engineering sector, not much fundamental research has been happening in other fields. We try to provide financial support to projects developed with the help of indigenous technology and in linking them to the market. But not many proposals reach the board. However, in times to come individual innovations will give a boost to the fundamental research. You have been president of Association of Indian Automobile Manufacturers in the past. Do you think the worst is over for the auto industry? Yes definitely, the worst is over for the auto sector. The sector is expected to witness a sustained growth of about 8-10% in the next few years but the overall economy growth figures seem difficult to be achieved. The last to recover will be commercial vehicle segment but the growth of the auto sector will be accelerated if the government focuses on the road building exercise.