Reliance Communications has lost RMS by 150bps yoy, Tata DoCoMo Indicom has recorded flat RMS on yoy basis and Uninor has announced to scale back operations from thirteen circles to nine circles. In addition Uninor needs to invest in possibly re-branding and purchase of 2G spectrum in the nine markets.
Tata Docomo has not seen any jump in revenue market share since March 2010 despite itís per second disruptive pricing early on and off late cost cutting initiatives and increasing 2G coverage. The weakening of the marginal players releases incremental volume growth and facilitates the convergence among top three players in our view. Closing of gaps between the top three players will facilitate voice recovery.
As financing has dried up, the companies have to focus now on profitability and thus rationality will return. Some weak players like Uninor, Videocon, Loop may auction off their assets and exit. Others like Aircel may merge with a stronger player to survive.