Indian operators easing off investment over next two years

The investment strategies of Indian operators over the next two years differ significantly from their counterparts in China, Indonesia and the Philippines, according to research from ratings agency Fitch Ratings.

Due to overall lower earnings in comparison to other Asian markets, Indian telcos are broadly expected to invest substantially lower percentage of their revenue into their networks. The Indian market’s ferocious competition is the major factor in this, although recent spectrum charges have also put a strain on operator finances.

The trend may stall data growth in India. While the four markets (China, India, Indonesia, Philippines) have roughly the same rate of data penetration, India is the only one where capital expenditure will shrink rather than grow across the next two years – despite the fact that it is already significantly lower there.

In China, operator capex per subscriber is typically over $50, while in Indonesia and the Philippines it sits at around $16. By contrast, capex for Indian operators is generally far lower, at around $6 per customer.

Fitch reports that Chinese operators have in fact raised capex expectations over the next two year from 12% to 15% to take network expansion into account. The majority of investment in China, Indonesia and the Philippines will be in data infrastructure as operators seek to extend their 3G and LTE networks.

Investment in India however is more likely to go towards decongesting operator networks, as traffic is far higher per MHz of spectrum than in the other major Asian markets. While in the other four countries there are typically between 5 and 6 million subscribers per MHz, this figure is far higher in India – often as many as 10 to 15 million.

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