Reliance Jio Might Be To Blame For Pressure In The Telecom Industry
Telecom sector of India is undergoing an era of pressure due to rising debt and growing losses, in the middle of elevated rivalry owing to the troublemaking entrance of Reliance Jio, claimed the Economic Survey this week in its research. While underlining irrational spectrum prices and reduced revenue, the study also highlighted that the crisis being encountered by telecom companies has also extremely affected their lenders, investors, vendors, and partners as well.
“It is significant to note that the telecom segment is going via a pressure period with debt pile, growing losses, reduced revenue, price war, and irrational spectrum prices,” the study claimed. It further added that it had warned about the situation in the last Economic Survey too. “A fresh entrant has disturbed the market with low-price data offerings and the income of incumbent companies has dropped. The crisis has also greatly affected lenders, investors, vendors, and partners of these telecom firms,” it claimed.
The latest entrant in telecom sector of India Reliance Jio began providing free voice calls and data from September 5, 2016 and ever since then it has been capable of garnering a user base of over 160 Million consumers as of December 2017. Jio’s strategies resulted in a tariff battle between current carriers comprising Vodafone India, Bharti Airtel, and Idea Cellular with Jio that led to free voice calls for users along with blobs of free data, but battered income for the older providers.
Apart from the harsh competition in the industry, providers have stated that almost 30 Paise of each rupee made by them is given as taxes and levy to the government, which is a huge factor for the loan of Rs 7.7 Lakh Crore of the industry. They, thereby, need lower spectrum costs and sharp decrease in levies. The study further claimed that the government was making a NTP (new telecom policy), where problems of licensing as well as regulatory frameworks affecting the industry, quality of services, connectivity for all, amalgamation of new tech such as IoT & 5G, and ease of carrying out business will be dealt with.
Telecom Regulatory Authority of India (TRAI) has also suggested new rules on net neutrality that forbids biased tariffs for data offerings, where service operators are constrained from entering into any agreement, arrangement, or contract, with any person, legal or natural, that has the impact of biased treatment on the basis of content, receiver or sender, user equipment or protocols.