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Comparison of Privatization Processes of Telecom Services in India and Brazil

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  • Jain, Rekha
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    Abstract

    Apart from being BRIC countries, what India and Brazil have in common is a large service sector that contributes significantly to the GDP. The service sector contributed 66% to the Brazilian GDP and 59% to the Indian GDP in 2010. Telecommunication services are a significant part of it in both the countries. This paper compares the regulatory processes of privatization of telecom services in these countries and the consequences of these on the telecom firms broadly and on the sector as a whole. Indian companies, facing harsh competition and having refined their business models to compete in this environment acquired the necessary expertise to foray abroad, opportunistically building their businesses. The highly competitive regulatory policies in India, led to the emergence of innovative business models and creation of large domestic companies both in services and infrastructure segment and consequently acquiring the necessary expertise to foray abroad. Brazilian regulatory policies focused on financially sound business and were open to investment by operators in other countries. Facing difficult domestic situation, the operators from Europe saw the Brazilian market as a growth opportunity. The paper concludes that although both in Brazil and India, the objective of the telecom regulatory policies was to bring in privatization and competition, the variations in models followed by the two countries had led to sectoral outcomes that are very different. Brazilian telecom sector had shown higher penetration, both for telecom services in general and broadband in particular but domestic companies, other than one, which too was recently partially acquired by Portugal Telecom, have not emerged. Phased and controlled FDI in India combined with the hyper competitive scenario has led to the emergence of Indian telecom firms that have become significant global players.

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    Bibliographic Info

    Paper provided by Indian Institute of Management Ahmedabad, Research and Publication Department in its series IIMA Working Papers with number WP2011-10-03.

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    Handle: RePEc:iim:iimawp:10678

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