Reliance Jio’s foray into the telecom market last year has resulted in a spate of mergers and acquisitions amongst the telcos. Bharti Airtel bought Telenor, Reliance communications merged with Aircel, Airtel acquired Tikona’s 4G business and Vodafone merged with Idea Cellular. CIO India spoke to Amresh Nandan, Research Director, Gartner on the consolidation wave in India’s telecom space and the road ahead for the industry.Over the last six months there have been several M&A in the telecom industry. Could you highlight the reasons for this consolidation wave? The entry of Reliance Jio in the telecom market acted like a catalyst to speed up consolidation amongst its competitors. A transition from voice to data has been happening in the recent past. This has been further emphasized with Reliance Jio’s foray into the marketplace. Infact, data is becoming more important than voice, which means that telecom players had to make an investment to create a stronger network, change the way they operate, and revise their go-to-market strategy. At the same time, the Indian government introduced polices to enable spectrum trading and norms to facilitate mergers and acquisitions. The Indian government’s supreme focus on digitization has influenced the telecom landscape in the country. Businesses are adopting cloud, and venturing into IoT. The telecom players leveraging these new technologies will have a better future than those offering just voice or internet service. This motivated many players to decide their future course. For example, Vodafone and Idea Cellular as a consolidated entity has a better scenario for capital and infrastructure. Infact, with consolidation, the economic efficiency of spectrum increases if we look at it from an industry perspective. Also read: Telecom pins hopes on disruptive tech for revivalDo you think gaining market share is the sole reason for this M&A frenzy?Yes. Gaining the market share and the subscriber share is a big motivating factor. The other reasons for mergers include a better spectrum portfolio and rationalization across 3G and 4G, and also attract better capital or equity. It is extremely important for telcos to envisage a long term strategy. And that requires growing subscriber base and attracting capital investment. Given the current state of competition in the industry, what strategies should telecom players formulate during mergers?Telecom players need to have an augmented strategy to reap benefits. They cannot restrict themselves by providing data, voice or internet services, but provide media services like entertainment, tie up with the government, and enable e-government services to the end customers.Telecom companies need to decide what types of augmented services they can provide and bid for. For instance, they can provide IoT services for home security, where a person’s home is under constant surveillance, secured with IoT systems.Agility of telecom players takes a hit when there are multiple IT systems beyond a point.In the case of providing services to businesses, there needs to be a different approach – how can they help businesses digitalize themselves. Examples include leveraging business models and technologies that allow better cybersecurity, cloud services and IoT across industry verticals.Overall, telcos will experiment with different services under this new M&A wave and only time will tell who will succeed and to what extent. The merger of Idea cellular and Vodafone India states that IT will be become a single entity. Does collaboration between regional and nationwide IT systems of telcos often result into a single IT entity? Yes. On most occasions, the IT of telecom players will merge into a single entity. The flip side of not being merged into a single entity will result in double set of hardware, applications and an extra workforce. However, complexity in the network and IT is one of the biggest challenges in mergers and that needs to be resolved.There have been instances where the IT of multiple entities have run separately. As a result, they paid a price in the form of not being able to develop ample flexibility in their operations, and inability to launch their products on time. Infact, the agility of telecom players takes a hit when there are multiple IT systems beyond a point. Also read: JioMoney Merchant app to make merchants go cashlessIs the spectrum made available by the government adequate to establish a sustainable business model, even after the merger creates a larger company? At present, there is no shortage of spectrum for what Communication Service Providers (CSPs) can do in a short to medium term. It’s all about correct utilization. For instance, telcos need to gauge the demands of the services in several parts of the country, and then rationalize the spectrum, across 3G and 4G. Spectrum should be dealt with from a technical and socio-economic perspective. Telecom players will find it difficult to invest in new technologies (such as 5G) if they are involved in an ongoing dispute.I believe, there is good scope for the government to further simplify spectrum auction, acquisition and usage guidelines. In the new telecom policy, the government should make it easy and efficient for the telecom players. What steps should the government take to create a sustainable environment for the telecom industry?The government needs to rationalize taxes including excise duty and import taxes. They should settle outstanding disputes involving telecom players. If this is not done, it will hamper their business operations because these factors affect decision making and investments. Telecom players will find it difficult to invest in new technologies (such as 5G) if they are involved in an ongoing dispute.Further, the government needs to highlight the different ways in which they can facilitate better convergence across different industry verticals. Mobile banking is one such good example. However, for telcos to effectively participate and contribute to other digitalization initiatives (such as smart city programs), more needs to be done.