Advantage telecom 
Wealth Insight|January 2017

With demonetisation giving a boost to cashless, one sector that stands to gain is telecom 

Devangshu Datta
Advantage telecom 

The initial impact of demonetisation has been pretty severe on cash-dependent industries. Sectors like real estate, construction, gems and jewellery will have to find entirely new ways to function. Textiles, automobiles, retail, etc., will suffer volume loss in the short run as consumers turn cautious.

One industry could, however, see relatively quick recovery and a big growth push, even though the initial impact is negative. The entire concept of going cashless (or less-cash) has to be built on top of the telecom industry's ability to deliver fast, reliable data services everywhere. The banking system runs off the net. Internal reconciliations between branches depend on the net. All financial apps and transaction channels like RTGS/NEFT transfers, ATM withdrawals, cheque clearances, the new UPI, wallet solutions, like SBI Buddy, are all built on top of the internet. Aadhaar can only be verified by using the net.

The credit-card system is also built on top of the net. Those who have used credit cards back in the USA in the 1980s will remember how cumbersome it was. The cashier telephoned the card issuer and laboriously checked details before a transaction was cleared.

Nowadays handheld PoS machines use SIMs to connect to the net, while wired machines use broadband. Mobile wallets - there are five or six mobile wallets for every credit card in India - also use the net. So do debit cards.

Smartphones are a necessity for most transactions and they are becoming cheaper by the day. As of now, there are 250-300 million Indian smartphones, compared to about 650-700 million feature phones. But new handsets are usually smart and feature phones are being phased out.

Apart from financial transactions, smartphones are driven by entertainment. A smartphone can access videos and live cricket coverage. Popular social-media tools like WhatsApp, Twitter and Facebook also work easier on smartphones.

This story is from the January 2017 edition of Wealth Insight.

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This story is from the January 2017 edition of Wealth Insight.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.