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Gartner warns against telecom bubble burst

19-February-2004
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Gartner warns against telecom bubble burst

The Indian telecom bubble may burst, just as it did in the US and European markets, if telecom service providers here lose sight of profits and keep focussing on expanding their subscriber base, according to telecom expert Bertrand Bidaud.

“There is no doubt that the Indian telecom market is booming and has tremendous potential. However, the level of competition being so high, there is a risk that companies may lose sight of profits and treat subscriber growth as priority, which can land them into trouble,” Bidaud, vice-president, telecommunications (Asia-Pacific), Gartner, said.

According to the expert, while the wireless sector has seen tremendous growth, development in other telecom segments in India have not been very encouraging.

“While the wireless sector is emerging as the important segment in telecom, other areas like Internet have been very disappointing,” Bidaud said.

According to Bidaud, the telecom regulator has a key role to play in seeing that there is no predatory pricing in the market.

“A company that is too aggressive on subscriber growth can bring down the industry. The regulator has to step in, not just on issues relating to tariffs, but also on matters like interconnection and unbundling of services,” said Bidaud.

“Apart from keeping their sight on profit margins, Internet usage should be promoted. Operators will also do well to offer differentiated services in order to tap the corporate market,” Bidaud said.

On the services side, Bidaud said SMS would continue to be the money spinner for operators for some more time.

Bidaud also predicted that there was ample room for growth in the Indian telecom industry, given that the usage level in India was still behind other developing markets in the Asia-Pacific region.

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