Is competition good for business? More specifically, is the excessive competition good for telecom businesses in India? On the one hand, customer is truly king at the moment, with aggressive pricing and interesting schemes wooing him. On the other hand, this cut-throat competition is still volume based and not value based.
The truth is that in this overly competitive environment, making profits is tough. And if no money is being made, there is none to invest in ramping up the infrastructure, which is a critical need in Indian telecom at this stage. For instance, the teledensity in rural India is just a little over 30 percent. We are also not using the best infrastructure technologies—most towers base stations are old and therefore more fuel-guzzling, adding to the costs for the company. Telecom infrastructure, therefore, needs a lot of investment—something that none of the telecom companies can spare.
If we miss the bus on infrastructure and innovation, we will get left behind. While India is one of the most exciting markets for telecom companies to be in, their growth here will be a painful process. Some may even be unable to sustain themselves in this volatile market and have to pull down their shutters.
This flux is a natural part of growth and maturity, and a healthy development for the long run. For the short term—it’s a jungle out there and only the mighty will survive.