Telecom Sector’s Future Growth to Come From Mobile Operators- Study by Cosmos Strategy

Mumbai, Maharashtra, India In a recent study conducted by Cosmos Strategy – one of the country’s leading Strategic Consulting firms based out of Mumbai revealed that the next leg of Nation’s growth potential to come from the Telecom and Retail Sector. The study reveals that the Telecom sector and Retail Sector in the country would witness a drastic growth in the coming years and it would expect to grow by 10 % from the current de-growth of 10% by year 2025.

Adopting differential Strategy is key to the sector's annual double digit growth by 2025

Revenue growth to be driven by value creation through OTT apps which re-calibrate micro-financing & retail sector

In a recent study conducted by Cosmos Strategy – one of the country’s leading Strategic Consulting firms based out of Mumbai revealed that the next leg of Nation’s growth potential to come from the Telecom and Retail Sector.  The study reveals that the Telecom sector and Retail Sector in the country would witness a drastic growth in the coming years and it would expect to grow by 10 % from the current de-growth of 10% by year 2025. 

This would be one of the largest sectorial revolutions the country would witness in the near future.

Current under-penetration of micro-financing, lack of exciting options for micro-investments and extreme fragmentation of retail sector are all opportunities waiting to be innovated upon to create significant valuation through new services by the operators. 

The Indian wireless landscape has witnessed a tectonic shift in the last two years post the launch of Jio. After two decades of continuous revenue growth, the last two years have witnessed both revenue and profitability drop for the incumbent operators. As per TRAI data, industry revenues for 2016 was 280 thousand crores, which shrunk by 10% to 255 in 2017 – all this while usage of data services have grown five-fold, which requires substantial capital investment in creating capacity.

While explaining the sector’s future growth potential, Nilanjan Mukherjee, Managing Partner, Cosmos Strategy said, “Indian telephone companies now should re-define their business model – from being “access revenue” from voice and data usage only, operators should fundamentally re-look at their core strengths and based on today’s internet and smartphone reality, they should participate in a much larger spectrum of activities.”

 “We must remember that for 80% Indian consumers, the smartphone is the only device through which they explore internet. This provides operators the ability to mine fabulous customer insights. Traditionally, operators had developed extremely sophisticated algorithms to measure and trigger growth of voice and data services to improve their revenues. But today, unlimited calls and fat data quotas have made such an activity redundant. So instead of ruing this, it will be useful to set up a very different customer insight program. The first possibility as the largest provider of internet services is to set up an AI-based customer insight engine. Privacy issues are being widely discussed but appropriate precautions can be put in place to ensure customer protection. Such a database alone has incredible potential – companies like Google and Facebook earn billions through such insight monetization” 

Mr. Mukherjee further explained, “The second area is a large customer base who is spending more and more through digital purchases from their smartphones. If you see some of the most exciting start-ups who have attracted huge valuation – say PayTm or Flipkart and witness their key product – mobile recharges and smartphones constitute almost half their revenue portfolio. One can never ignore the hunger, dexterity and single-minded focus of PayTm or Flipkart – but here is how the operator could have done it better. If the large operators had set-up a dedicated digital recharge platform and not allowed any outside service to sell their product they would now have a company valued several billion dollars. While today’s reality is purchase through the phone, tomorrow the same services will work on voice-activated platform like the Alexa’s of the world. It will be interesting to see if operators are keen to create such futuristic products on their own and not let the value creation to be externalized. Similarly, operators are well placed to upgrade customer smartphones through contextual insights-based offers (camera quality for selfie user, battery life for video user or large memory for heavy app users). They can even sweeten the deal by bundling their own voice and data services along with the phone.” 

Mukherjee continues with some other areas which have incredible potential without strong players, which he feels could have the maximum potential going forward. “The large customer base, high trust levels and deep on-ground presence coupled with the flexibility of the digital world gives operators great leverage to launch services like micro-lending or micro-investments – India is a country with fortune at the bottom of the pyramid and no one today can better explore this than mobile operators.” 

“Similarly, retail is one of the largest area waiting to be innovated. Our severely fragmented retail footprint in India is now coming under stress due to discounted prices from e-commerce giants like Amazon. The effective solution to the retailer's problem has already been demonstrated in neighbouring China. Ule, a service launched between Tom and China Post, provides a business-to-consumer e-commerce platform that supports online and offline store integration, distribution, logistics, and promotion. Despite having Alibaba and within a short span of one year, Uli today has clocked revenues in excess of 1.3 Billion USD and provided relief to small retailers by creating a larger stock visibility and fulfilment by clustering retailers. Such a service platform is a crying need in India and in terms of infrastructure capability it can be ideally created by mobile operators.” 

“The success of Hike, Wink or Jio TV has proven that operators are already activating themselves in the OTT area. But mobile operators all over the world have launched similar products. The real scope and potential could be significantly higher – in today’s connected IoT enabled world. The real question is finding the correct structure which captures the hunger & agility of a start-up with the might and ability of an operator.” 


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