Wall Street Journal (under subscription wall) has an article on India’s telecom industry and how messy it’s because of the government’s apathy towards the industry in clearing several policy hurdles and so on. It says:
A recurrence of familiar old problems — regulatory roadblocks and foot-dragging by state-owned competitors — is threatening to cool expansion in India’s red-hot cellphone sector and is frustrating telecommunications investors.
I would call it an “uneduacted” article on the Indian telecom business. Everybody knows that telecom is India’s biggest success story. It’s the most successful example of privatisation in India. Sunil Mittal of Bharti Airtel has built a $15-billion (in market cap) company, thanks to the liberalisation in telecom business. Vodafone has picked up 10 per cent in Bharti (with an opportunity to hike the stake upto 74 per cent or whatever), thanks to the government’s liberal policy.
Hutchison Whampoa holds a majority stake in a highly valuable franchise – Hutchison Essar – and they can cash out any time taking home billions of dollars. Singapore Telecom has been long term investor in Bharti Telecom. Investors have made huge money from the telecom business in India, thanks to government’s decision to open up the sector.
I agree that there are still some regulatory and policy issues that need to be tackled – like spectrum/3G spectrum etc. But it’s progressing, although slow. We can’t put blame entirely on the government for inaction. The industry is also fragmented. There are two lobbies – GSM and CDMA operators. Both lobby for policy favours. Then there are international majors like Qualcomm lobbying for their own benefit. So it’s clearly a one-side take from WSJ.