Indian Telecom Story (Part V): Collaboration as a tool to profitability

The recession has not been able to put the spanner through the growth engine of Indian telecom Subscribers. It is adding the 10 million month after month and the engine seems good to keep chugging on at a fair and brisk pace. The ARPU are south bound, which has a direct relation to profitability. However, competitors collaborating with one and the other have been able to keep the costs light. Wonderfully well, collaboration has reduced the CAPEX and OPEX of the operators giving them the healthy booster shots in their profits!

I had reported sharing of the infrastructure / towers/ sites in some of my earlier posts as well. This has the single biggest tool in terms of reduction of the Capital expenditures! It was under the government intiation that infrastructure sharing started off. The win win logic, was higher reach (which the government was persuing) and lower CAPEX which the Telcos were persuing while adding the numbers. Both these objectives were thus fulfilled by Project MOST! Operators today have set annual targets of 50 - 60% incremental sharing!

The traffic varies from being heavy in the day times to being sparse in the night times. An analysis of the traffic for geographies also enbales switching off the sites, without impacting service quality and on the other hand, making savings on the OPEX!

While project MOST is based on existing infrastructure sharing, roll out of infrastructure in weak coverage areas and sensitive areas is also happening through collaboration. So instead of 2 or 3 different towers in a newly opened geography, operators are agreeing on one site shared by the others.

Three simple steps and yet, when CAPEX accounts for 31% of your Revenue and your OPEX is $ 6 (per consumer), with ARPU of $6 per month (implying no margins), changes in these figures can significantly alter your bottomline.