Vendors Could Be Squeezed Out of Managed Services Market in India: Study

Vendors may find themselves squeezed out of the managed services market in India, according to a new study from ABI Research, which predicts the market will see consolidation over the next few years.

Currently, India’s managed services market is dominated by Ericsson and NSN, followed by Alcatel-Lucent, Huawei and ZTE (News - Alert).

“Within the next two to three years, we are likely to only have room for three managed services vendors in India, as consolidation takes place. Beyond Ericsson, NSN, and possibly a third vendor we don’t really see a scenario for anyone having a profitable managed services business,” Aditya Kaul, practice director, mobile networks at ABI Research, said in a statement from the firm.

The Indian mobile market has some 17 operators operating across 22 circles. Some circles have up to 14 operators, ABI said.

But following the government scandal related to 2G spectrum auctions, 122 licenses were canceled. Some operators lost licenses completely.

“As a result, foreign operator partners like Etisalat, S Tel, Batelco and probably Telenor (News - Alert) are expected to leave the market,” ABI predicts. Huawei and ZTE got managed services contracts with many operators which had their licenses cancelled, the firm added.

A new auction of the 2G spectrum is likely to take place next year. Portions of the spectrum are likely to be taken by the large operators, and maybe, RIL, based on predictions about the upcoming auctions, ABI said.

“Ericsson and NSN will see increases in their market shares, as the traditional large operators will most likely continue their managed services relationships,” Kaul explained in a statement carried by TMCnet. “There is always a chance of Huawei and ZTE competing on price, and while Ericsson and NSN might only see a squeeze in profit margins, Alcatel-Lucent (News - Alert) is in a vulnerable position of losing business with their Reliance contract.”

In other communications news from India, Reuters reported that a court granted a stay of a government order asking telecoms to stop 3G services outside their licensed areas via roaming pacts. Bharti Airtel (News - Alert) Ltd had challenged the decision.

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