Indian telcos have had a chequered history as policy changes kept the landscape uncertain for most of the previous quarter-century. The industry suffered bruising price wars and high upfront spectrum costs that affected network upgrades. With policy becoming more stable and data consumption propping up subscriber revenue, competition in the industry is swivelling towards service quality. Bharti’s move is an admission that the game has changed from chasing low-yielding subscriber volumes to lucrative enterprise and upscale personal data consumption. Satellite communications offer an easy and quick way to roll out the latest-generation telecom networks.
Bharti’s strategic stake in BT does not materially alter the pecking order of the world’s most valuable telcos, which US firms dominate. Bharti Airtel will continue in 7th place, trailing Deutsche Telekom. Yet, the valuations can only change in Bharti’s favour as Indian and African subscribers increase their data consumption and are willing to pay more. The disconnect between subscriber numbers and revenue will subside over time. Satellite communications could likewise weigh in for telecom networks spread over larger geographical areas, such as those in Africa, the US, China and India. Mittal is taking the back seat as an investor in BT. But it is a strategic fit in his telecom empire.
