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Why Do Global Telcos Fail To Make A Mark In India?

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Why Do Global Telcos Fail To Make A Mark In India?

American telecom bellwether AT&T and Virgin Media are planning to enter the Indian market again, claims a story in The Economic Times. The two companies might be considering Mobile Virtual Network Operator (MVNO) route to make an entry in the Indian market. The Indian Government recently allowed setting up of MVNOs in the country.

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The $147-billion company, AT&T might be even considering participating in the spectrum auction later in the year. With new technologies like 4G coming up this might be a good time for an international telco to enter this market. This would be second coming for both AT&T and Virgin Media. AT&T had entered the Indian market way back in 90s but decided to pull out in 2005. On the other hand, Virgin Media had tied up with Tata Teleservices but decided to discontinue operations in 2008 because of lack of business.

Huge potential of the Indian market has always lured global players to enter the market. However, usually they face unique challenges and find the going tough in the country. A case in point is Etisalat, which tried to establish itself a few years back. However, the company decided to exit its Indian operations once all its licenses were cancelled. Virgin Media had also partnered with Tata Teleservices and had tried to break into the market but without much success.

Norway’s Telenor has also not had smooth sailing in the country. The company’s pan India telecom licenses were cancelled and today it is operating only in six circles (service areas) out of total of 22 circles. NTT DoCoMo, which till recently had a tie-up with Tata Teleservices, decided to bow out of the market here.

Arguably Vodafone is the only successful foreign telecom operator in the country. However, even Vodafone is facing huge challenge in the form of tax issue, a controversy which refuses to die down.

Indian market offers huge potential but Average Revenue Per User (ARPU) are one of the lowest in the world. At the same time the spectrum cost is high. This anomaly brings down the profitability. Moreover, understanding of this unique country and its way of conducting business is critical for success here. Just implementing global best practices is unlikely to lead to success in the Indian market. It requires out-of-box thinking for problems which are unique to this country.

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