As far as telecom space goes, India wants to be free from 2G and be ready for 5G but as of now, we only talk about telecom with respect to three stocks including . Some say India with its massive digital opportunity, cannot possibly have only two stocks to play on this story.
If you talk about the larger digital opportunity, it is not just two stocks. there is a larger opportunity across sectors to play the digital theme. However, just coming back to the telecom question first, when we look at telecom, telecom has been a sector where we have seen consolidation. However, despite the consolidation, pricing has remained elusive and one thing that is important from an overall sector perspective is that most of the companies have recognised that for profitability to improve, pricing needs to go up. So we are clearly waiting for a scenario where we will start seeing improvement in ARPUs, which in turn will drive profitability.
We are waiting to see what happens with the third player in terms of outcome and that also will be a key determinant in terms of outcome on the pricing and what the other two players do. This is a sector which is poised to see improvement from an overall profitability perspective. Obviously, this sector has seen significant consolidation and that is something which is hopefully likely to translate into better pricing power going forward.
In the near term, over the last year -and-a-half, because of Covid related situations we have seen a delay in terms of price increases. But at the margin, most of the players seem to be suggesting that profitability is likely to be the key that the management of these companies would be looking for.
From a digital perspective, there are many more opportunities and not just telecom. Whether you look at emerging opportunities in the financial services space, fintech space or even in the IT services space, there is a larger theme that is playing through where digital is concerned and over the years to come, we will see a lot more players emerging in this space where we will be able to play the digital opportunity.
Covid has accelerated the digital transformation story across the board. Companies worldwide have realised that they have to bring forward their digital transformation journey and that has benefitted IT services in a big way. Even in financial services, banks and other financial services players are focussing on digital and digital is a theme that is emerging and is likely to be a key differentiator among players going forward as well.
