The business article analyzes the challenges and opportunities that lie in front of the Telecom Service Providers in 2016.

1. 2016 - The Road Ahead by Sohag Sarkar
February 2016
Sohag Sarkar, Associate Director-Strategy & Operations, KPMG Advisory Services
The year 2016 would be the Year of the 4G with consumers witnessing myriad 4G service launches
across various parts of the country. The operators' main impetus would be to further strengthen the
loyalty of their subscribers especially in their leadership and/or 900 MHz Circles.
The spectrum holding platter is unique across different Circles and, therefore, the operators would
have to devise distinct strategies in their respective Circles.
Challenges
The market dynamics is like quicksilver and operators have to act to stay in the game. The 4G
launch by the market leader was perhaps one move that caused a ripple effect amongst close
competitors. Going forward, there would be no room for wait-and-watch spectators (as witnessed
during the last spectrum auctions):
CapEx floodgates. The CapEx outgo would remain high on account of 4G infrastructure rollouts
and network upgrade.
Spectrum auction. TRAI has already initiated the process to firm up reserve prices for 700, 800,
900, 1800, 2100, 2300, and 2500 MHz spectrum bands. The impact on license renewal would be
minimal when compared to FY15. However, operators need to be cautious on their spectrum
strategy from a future technology upgrade stand-point. In the past, the operators have ignored the
lucrative 1800 MHz spectrum (for LTE) during the spectrum auction only to buy it now with
escalated reserve/auction prices later.

2. Customer experience. With overlay network architecture (2G, 3G, and 4G), it would be difficult
for the consumers to have a uniform service/network experience. On the other end, the regulator
would be firming the policy on call-drops. From here on, the impact of poor customer experience
will only grow in financial severity.
Data monetization. The Industry would be keen on net neutrality policy; to understand the
boundaries within which the product managers would be able to exercise their creativity when it
comes to innovative products and services
Opportunities
A Chinese saying might go well with the market challenges being faced by industry today - In the
midst of chaos, there is also opportunity (Sun Tzu):
4G monetization. The Digital India branding together with the spurt in Digital start-ups, will
provide the necessary fillip to the 4G revenue. The data ARPU will witness some upward traction.
It would be interesting to analyze the complementary (or cannibalistic) effect of 4G revenue over
3G.
Digital payment. Telcos that bagged the payments bank licenses would build the required
infrastructure to extend the facility to end-users; while synergizing it with their telco operations. It
would further expand their cash reserves and revenues.
Customer experience management. The push towards data and digital servicing strategy will
ensure adequate management of customer experience. On the other hand, carrier aggregation
strategy (i.e., LTE Advanced or LTE Unlicensed), which allows pooling of fragmented spectrum

3. bands to provide enhanced customer experience (together with device ecosystem) would be a
worthwhile proposition (considering overlay architecture).
New business ventures. The telco-OTT strategy may empower the operators to win-back the
revenue being lost to traditional OTT players. Music, video, and games may be the popular
segments to look forward to. Digital India, Smart Cities, M2M/IOT, and API monetization are
perhaps other areas that can marginally uplift the operators' revenue
The market is equally poised with challenges and opportunities as India gears up to witness the
next wave of digital and revenue growth.