Stocks of Indian wireless operators have performed poorly in 2009 when compared to the rest of the BSE. Although the wireless market in India is growing exponentially, operator revenues have come under a lot of pressure due to the hyper-competitive nature of the market. India is an extremely price sensitive market with very limited brand/network loyalty. Therefore, so far, wireless operators have focused on competing primarily on price. When faced with aggressive pricing plans like Tata Docomo's 'Paisa Per Second' plans, competitors are forced to follow suit with price cuts of their own, leading to overall dilution in revenue and ARPU.
While this trend is expected to continue in the short-term, wireless operators cannot continue down this path in perpetuity. The medium-term trends point to consolidation in the Indian wireless industry; and this would be especially true if 'The Rule of Three' holds good. Over the medium to long term, the only sustainable path for wireless carriers is to ensure that the basis of competition changes from price-based-competition to other bases of competition like network coverage, value, features, etc.