By Vipin Agnihotri
You may not believe at first but it’s true that the second wave of the telecom revolution in India is being led by real estate developers of India. It has come into the notice of The India Street that real estate developers like Indiabulls Real Estate Limited, DLF, Unitech and Parsvnath Developers have applied for universal telephone licenses.
This is not surprising in my book because in India still only one out of five person uses a cell phone and real estate developers are interested in making profit out of this promising sector.
If experts are to be believed, Indiabulls Real Estate Limited has applied for telephonic licenses in 22 cities, which will give them access to sell wireless, fixed line and internet access services in India. The market cap of Indiabulls Real Estate Limited is Rs 15,726.41 crore and company has a net worth of Rs 6,300 crore.
Initial signs are that most of the real estate developers will play a role of financial investor in the telecom sector and not an operator, pretty much like the role Essar is playing in Vodafone. Talking about Indiabulls Real Estate Limited, they have planned an outlay of Rs 1,500-1,700 crore for the telecom business.
Point to be noted here is that while telecom market may be big but players like Reliance Communications and Bharti Airtel have a head start. As a matter of fact, these companies have already roped in millions of subscribes. In this scenario, what chance would these new players have of making a dent in a business that’s capital intensive and with a long gestation period?
That is where; I believe that some of the real estate developers are not a serious player. In other words, it’s more of a valuation game for them. In a sector where average revenues per user are dipping, it will be real tough for new players to capture market share.
In terms of statistic, for fiscal 2008, Bharti and Reliance Communications have already planned an investment outlay of more than $ 12 billion to expand their networks. The only advantage for the new players is the low penetration of telecom services in India.
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