"The cleverest of all, in my
opinion, is the man who calls himself a fool at least once a month."
-
Feodor Dostoevsky(Russian, 1821-1881)
Word for the day
Otiose (adj)
Being at leisure; idle;
indolent.
(Source: Dictionary.com)
Malice towards
none
In a society where history
is quintessentially intertwined with religion & mythology and laced with
guilt - how science could progress.
A stich in time!
At the recently concluded annual general meeting of the Reliance
Industries Limited, the management of company presented some glimpses of their strategy
for the telecom business under Reliance Jio brand.
While the analysts are divided over the extent of damage it might
inflict to the existing players, three things are clear:
(a) The Indian telecom
industry shall see enhanced competition and pricing pressure in next couple of
years. The consolidation and elimination process will continue and perhaps
accelerate.
(b) Most players will have
to incur material amount of capital expenditure (capex) in next few years to
protect their market share and growth.
(c) Though the primary
battleground will be "data"; the voice, smart phone and tower
infrastructure segments will also see increased competitive intensity.
This essentially means that (a) debt of all major telecom players
will remain at elevated level; (b) the financial stress of marginal players and
consequently lenders will rise; (c) the lenders may be reluctant to fund
further capex of even major players given already leveraged balance sheets and
moderate profitability growth visibility.
The solution may come from further equity dilution or higher
foreign equity contribution, at the expense of extant shareholders.
Another negative from existing investors' viewpoint would be that
the transformation of Indian telecom industry from a high growth industry to a
utility is pushed further back by at least 3years. The dividend paying ability
of major players will remain constricted.
So while I eagerly wait for full fledged 4G services at promised
rate of Rs400/month, I continue to ignore telecom companies for investment.
From policy perspective, I believe the government has been unfair
to the industry.
The government has been consistently supporting the Textile
industry in the country for past many decade. The primary consideration for
such support has been the large number of people employed by the industry.
However, anecdotally I find that incrementally telecom sector has
employed much more people than the traditional textile industry. During my
travels across the country, I have noticed that mobile telephony has provided
respectable and profitable self-employment to millions in past one decade.
The government has however only exploited this sector. Rather than
recognizing the sellers of pre-paid cards, mobile repair shops, mobile
accessories' sellers as MSME, the local civic authorities often harass them and
treat them with contempt. These businesses are seldom considered favorably for
organized financing.
May be the policy makers are waiting to see that the businesses in
this sector also go the traditional textile industry way before making any
concessions for them!
The scenario is neither improbable nor too distant in the future.
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