Price wars, mergers, sell offs, corporate accusations, regulator-operator tiffs, lawsuits and job cuts — developments that roiled the telecom industry in the past six months or so are now case studies at business schools to explain management concepts.

The turmoil in the telecom industry has offered a number of examples to cover everything from handling of human resources and industrial relations to strategy, marketing, business model and pricing that form part of management courses, professors at Indian Institutes of Management, XLRI-Xavier School of Management, Indian School of Business, SP Jain Institute of Management & Research (SPJIMR) and other B-schools said.

“The telecom sector is of strategic importance to the Indian economy as new technologies create new communication options and telecommunications can reduce information and transaction costs,” said S Raghunath, who teaches corporate strategy and policy at IIM-Bangalore.

He has been discussing with students how low tariffs could lead to unsavoury consequences for companies but benefits for consumers. Sectors like banking and insurance, too, could benefit as lower tariffs mean higher profits for those who heavily depend on the service to market and deliver their own products and services. The entry of Reliance Jio Infocomm has shaken up the telecom sector that had three dominant players — Bharti Airtel, Idea Cellular and Vodafone India. Jio’s free offers that lasted for six months led to the industry’s worst price wars. The aftermath was falling revenue and profits for the companies, debt upwards of Rs.4.8 lakh crore and a wave of consolidation.

The tiff between the Telecom Regulatory Authority of India and the incumbent operators is also being discussed in management colleges. Raghunath pointed out to his classes the importance of a proper mix between a low regulation profile in the field of the Internet and considerable regulation in the telecommunications sector. “Inadequate regulations could dampen investment and innovation in the sector,” he said.
At the Indian School of Business, the upheaval in the industry is being taught from the marketing perspective. Siddharth Singh, associate professor of marketing, is teaching what happens when incumbents take preemptive steps to make it difficult for a new entrant to get traction in the marketplace or when they do nothing. How to retain existing customers and acquire new ones aggressively and how to respond to specific strategies used to counter the latest entrant are also part of the lessons.

Professors at top B-schools said unlike some other societies that developed hand-in-hand with stages in new technology, India was deprived of new technology for long and is now leapfrogging to latest developments.

“Therefore, telecom services are causing disruptions in not only how we conduct business, but also how we relate to each other. Naturally, such major changes create opportunities and challenges that we find companies grappling with,” said Singh.

At IIM-Calcutta, the jittery global players in the telecom industry in India and its impact is taught. Anirvan Pant, associate professor, strategic management, taught his classes on how the disruption for global players has taken place when their age-old business model had been challenged.

“Traditionally, global players had all business models converge to a centralised way, but in India, with dynamic shifts, they have had to change keeping competition in mind and this has caught them by surprise,” said Pant.

Last year, UK’s Vodafone Group wrote off £4.4 billion in its India business. Among others, Telenor exited the country, selling its Indian unit to Airtel, while Japanese firm Docomo is expected to leave once its legal tussle with the Tata Group gets sorted out.

Pant is also teaching his class how the biggest corporate groups can make erroneous bets, like the Tata Group whose call to pursue CDMA business went kaput. The sector has also seen a battle on brand building with advertisements across media being used to target each other. SPJIMR students are learning product and market development via changes in telecom sector.

They are studying whether the past six months would have shaped differently if, instead of price wars, telcos waged a battle on better product offerings. “To be able to survive, you have to sign up for a sustainable business than one on just price points,” said Ashita Aggarwal, associate professor and head of marketing department at SPJIMR.

She explains to her students how number portability had made it tougher for telcos since large number of subscribers switching to other networks made operators jitterier.

Mobile number portability allows a subscriber to change his network while keeping the phone number. The pricing wars and how firms concentrate on a certain economic strata that became the game changer are taken up as case studies at XLRI-Xavier School of Management.

Examples such as how companies concentrated on premium subscribers and then, when a new entrant with freebies entered, scrambled to sign up everyone, are being explained. Jio, since its launch in September, managed to get 100 million-plus users and more than 72 million of them have signed up for its paid services. “How to cope in an industry where the dynamics are constantly changing with advancement in technology and new offerings by companies is an important lesson,” said Manoj Thomas, associate professor, strategic management area, at XLRI-Xavier School of Management.

From: Economic Times | April 12, 2017 | Written by: Devina Sengupta

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