Vodafone Says Hyper-Competition Bad for Indian Telecom Industry

Asking government to take steps to rectify the structure of telecom industry, Vodafone India's chief Marten Pieters Saturday said it is not possible for 10-11 operators to survive in the market.

Speaking during a panel discussion, Pieters also said that the government is taking a "backseat" on this issue of competition a charge which was immediately rejected by Union Minister Piyush Goyal who said at the same event that it was not the government's job to restrict competition.

Pieters, who said government needs to rectify the telecom industry structure to make initiatives like Digital India and smart cities a success, clarified that he was not against competition but felt that 'hyper-competition' has proved to be counter-productive for the industry.

"...the government is not responsible for our profits but it is responsible for the industry structure because it (telecom) is a heavily regulated industry... If the digital India agenda and the smart cities which the government is talking about and where we are all very supportive, if that needs to happen than you have to fix this problem, one way or the other," he said at the 'India Economic Conclave'.

Asserting that it was not possible for 10-11 telecom operators to survive in the market, Pieters said, "The industry structure is wrong, you need to rectify the industry structure... I have many discussions with the government... I think the government is taking too much, in my view, a backseat in this competitive issue."

Power and Coal Minister Piyush Goyal, who was part of the same panel, however said it was not the government's job to restrict competition to take care of the interests of the existing players.

"I think it's a little unfair to say that if one has boarded the train, the government should not allow others to board the train... So, I beg to disagree that its government's job to restrict the competition and take care of interests of existing players," Goyal said.

Pieters, immediately, clarified he is not asking to restrict competition, but he felt that giving six new licenses some years ago was not well thought through by the government, as the impact of that step has not been good overall.

"Of course competition is good, but hyper competition is counter-productive in this industry," Pieters added.

Across the globe, Vodafone India head said, usually there are 3-5 telecom operators in a country and the financial health of the fifth one is not very great. Its only the top two operators which make good profits, he claimed.

Pieters had earlier also said telecom industry in India was in a mess and it was a result of the thinking that more the competition, the better it is.