The central government and industry regulator Telecom regulatory Authority of India (TRAI) may have given the go ahead for in-flight connectivity services over Indian Airspace late last year,but no fir has begun offering them yet. this may change soon, however, with several developments over the last few weeks indicating that service provider are getting close to a roll out.
While the first in flight connectivity licence was issued to satellite communication market leader Hughes Communication India only in February this year, nearly three months after the government gave the green light, the subsequent months have seen a flurry of licence is sues. After Hughes , satellite service provider like Tatanet Service, a wholly owned subsidiary of Nelco; Bharti Airtel subsidiary Indo Teleports Limited (ITL) and state run Bharat Sanchar Nigam Ltd (BSNL) have all been granted 10 year licences by the Department of Telecom. Sources also say that several other telecom and satellite communication majors like Reliance Jio , Ortus Communications and Cloud Cast Digital have made applications.
More recently the top two market leader in the Indian Very Small Aperture Terminal (VSAT) industry -Hughes communication India and Bharti Airtel - have announced plans to merge their two bussines together. VSAT services are used to provide satellite -based telecom and internet access to individuals and enterprise users, especially banks and their ATM touch points.
However, VSAT is also the backbone of in-flight services across the world and experts say that the impending merger of Hughes and Airtel's VSAT business will create a giant entity capable of taking on rivals in sector, existing and new like Reliance Jio.
According to TRAI's market report for the quarter ended Dec 2018, the number of VSAT subscribers in India stood at 2.87 lakh, growing by 1.96% . Hughes Communication controlled the lion's share of the pie(35.89% market share), followed by Bharti Airtel (27.7%) and Tatanet Services (23.51%). Post merger, the new company is set to hold nearly 64% of the market.
Industry observers say that VSAT market is currently rather minuscule compared to the larger telecom industry, at around ₹900- 1000 crore a year.
However , the rollout of in-flight services has the potential to open up the segment, and ongoing consolidation is a sign that companies are gearing up to take on the new market, say insiders. ''The Hughes Airtel combine can be formidable because they can leverage what economies of scale are there. Secondly with Jio also an aspirant, incumbent market leaders will need to find way to counter Jio's financial muscle. Consolidation is one way to do that,''said a senior industry executive .
For their part, Hughes and Airtel say '' the combined entity will benifit from enhance scale, improved operational efficiencies and wider market reach.''. ''(We) will be well positioned to leverage the demand for secure connectivity in a rapidly growing digital economy ,'' an Airtel statement said . ''Combining the proven capabilities of both companies,'' added Ajay Chitkara, director and chief executive officer, Airtel Business,''the partnership will bring synergies to the forefront for the benifits of customers.''Post the merger , Hughes will hold 67% stake in HCIL, while Airtel will have 33% stake.
The in-flight services market is expected to rise sharply. Euro consult, for instance, says that over 23,000 commercial aircraft will offer such services to fliers by globally,from just around 7,400 in 2017.
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