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How To Lose $23 Billion In A Market That's Surged 61,436%

Losses overseas firms in Indian telecom market have risen to $23 billion That includes impairment charges, losses reported in company filings Jio's entry has proven to be a turning point in consolidation for market

Jio stormed in with free voice services for life and initially free data services to lure subscribers.
Jio stormed in with free voice services for life and initially free data services to lure subscribers.

Making money in a booming Indian mobile-phone market that soared from fewer than 2 million users to more than a billion in less than two decades might have seemed like a no-brainer. Now it's more like a nightmare with losses for overseas companies rising to at least $23 billion.

"The promise of a market with over one billion potential users is very attractive," Chris Lane, a Hong Kong-based analyst at Sanford C. Bernstein, said by email. "Too many licenses, too little spectrum, high taxes and supply-constrained airwave auctions has made this a very expensive market to operate in."

The $23 billion lost includes impairment charges and losses reported in company filings of global majors from London-based Vodafone Group Plc to Japan's NTT Docomo Inc. - all of whom have exited or suffered as hyper competition has hurt the earnings of even the market leader Bharti Airtel Ltd. Expensive spectrum auctions and cancellation of telecom licenses in the wake of a graft probe made it even harder for the companies that piled into a market that as of 2015 included 12 competing operators.

Investor Losses/
Write-Offs
Status
Vodafone Group $8.7 billion Merging with Idea Cellular
Maxis Communications $7 billion  Filed for bankruptcy
Telenor $4.1 billion  Sold to Bharti Airtel, exited 
NTT Docomo $1.3 billion Litigated, sold stake back to Tata group, exited
Etisalat $829 million Exited
AFK Sistema  $695 million Merged with Reliance Communications
Axiata Group Bhd $356 million Took write-offs, still holding 10.66% in Idea
Total  $23 billion  
Sources: company filings, statements

The entry of India's richest man Mukesh Ambani's Reliance Jio Infocomm Ltd. in 2016 has proven to be a turning point in consolidation for the market. The upstart stormed in with free voice services for life and initially free data services to lure subscribers, prompting smaller rivals to merge or quit the market altogether.

How To Lose $23 Billion In A Market That's Surged 61,436%

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