Monday, September 7, 2009

Credit Crisis as an Opportunity: Big is getting bigger in Telecom Sector

“Every crisis as an opportunity and so is credit crisis”. I disregarded this as a hollow positive thinking management talk earlier.

There were reports how few companies actually prosper even in great depression. I was taking this with a pitch of salt probably cause and effect fallacy with hindsight bias.

Having said that, I am now seeing first data point in Telecom industry, how big is getting bigger and taking advantage of credit crisis.


Indonesia Telecom industry is dominated by three players – Telkomsel, Indosat, Excelcom

The market share by subscribers is Telkomsel (51%), Indosat (26%) and Excelcom (22%)

Credit Crisis as an Opportunity

As credit crisis hit, it was difficult for smaller players Indosat and Excelcom to raise money and fund Capex. They lowered their Capex by 50% in 2009 vs 2008

Telkosmel largest player sensing opportunity actually raised its Capex by 25% in 2009 vs 2008


Last two quarter subscribers data is showing while Indosat and Excelcom lost subscribers, Telkomsel is increasing its subscribers in fast growing Indonesia Telecom Market

­“Over the last two quarters, Indosat and Excelcomindo, Telkomsel's two largest competitors, have both reported lower customer numbers, with the first losing 3.24m in Q1 and a further 4.4m in Q2 and the second, a rather more modest 1.12m and 220k”


Big is getting bigger…

So in credit crisis, invest in bigger blue chips…leaders in their industry, who are taking this opportunity and going on aggressive spending mode..

Same thing China is doing , treating credit crisis as an opportunity buying all raw materials of the world and building additional capacity. Chinese companies might give run for their money to companies in other parts of the world later…!!