Weekend reads from India - May 12, 2018

  • Preparing for India’s next telecom revolution (Livemint)

    The 2017-18 Economic Survey noted, “It is important to note that the telecom sector is going through a stress period with growing losses, debt pile, price war, reduced revenue and irrational spectrum costs.” If the situation wasn’t grave enough, the unfeasibility of a 2020 5G launch truly becomes apparent in light of the fact that unlike in the US and China, where most towers are backhauled using fibre, more than 75% of the towers in India still employ legacy microwave transmission systems.

  • The Odds Are Even - Walmart vs Amazon (Outlook Business)

  • India’s Disappearing Deficit: What’s Putting Modi In The Driver’s Seat For 2019 (Bloomberg)

    The Indian government is close to balancing its books for the first time since the Global Financial Crisis of 2007-2009. Final figures are due out later this month, but preliminary statistics suggest that India will achieve a primary fiscal deficit under 0.2% of GDP for the 2017-2018 fiscal year that ended in Mar

  • Flopkart - US investors simply don’t get why Walmart bought Flipkart: “It makes zero sense” (Quartz India)

    Frankly, this deal reeks of empire building: Walmart is buying its share of Flipkart because it feels entitled to retail growth globally, but the reality is that Walmart’s investors would be far better served by Walmart investing the cash in its fight against Amazon or, if it feels it is already spending enough, returning the cash to shareholders who can decide on their own how to invest in the market (likely by buying Amazon shares, natch).

    …To be clear, Walmart management has only said it supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future. How far in the future is unclear, but given clear advantages to doing this, we would be surprised if it was more than two to three years.

  • Walmart’s India Deal Is Admission of Defeat (Bloomberg)

    And the Indian consumer expects different services as well. Flipkart’s great innovation was to offer cash on delivery for the stuff they sold. Indians are justifiably suspicious of courier services and demand to hold the item they’re buying in their hands before they disburse their hard-earned money. Even after Modi withdrew most of India’s cash in November 2016, almost two-thirds of Indians still use COD. According to Nielsen, 83 percent of Indians – and 90 percent in smaller towns – prefer cash as a method of payment. This has a ripple effect on logistics, profitability and capital requirements. More importantly perhaps, it isn’t exactly how e-commerce works outside some developing countries. I’m uncertain if anything Walmart learns from Flipkart’s operations in India will be applicable in more mature markets.