Rx For Financial Health Of Telcos

Telecom companies in India have gone through a phase of consolidation and are still reeling under the financial stress triggered by the disruption in the market, low ARPU despite the recent tariff hike by the telcos, and last but not the least, the AGR payment crisis that is threatening to create a duopoly market in the country. The TLF panel discussion deliberated on what ails the industry, the available financial options and how the government can support the industry to make it healthier. The key participants in the discussion moderated by Voice&Data Consulting Editor Shubhendu Parth included Bharti Enterprises Vice-Chairman and Bharti Infratel Executive Chairman Akhil Gupta, Broadband India Forum President TV Ramachandran, and COAI Director General Rajan S Mathews. Excerpts:

- Shubhendu Parth

Shubhendu Parth (SP): The telecom sector in India has gone through a lot of turmoil, including the AGR issue and this presents a dichotomy since the country is aiming to become a developed nation by 2047 and telecom is the essential infrastructural backbone, which is a prerequisite for the growth of a digital economy. What are your views on this?

Akhil Gupta (AG): The telecom industry is vital but unfortunately things have gone horribly wrong leading to the financial mess that the TSPs are in today. There are several reasons for this. One, the government treats telecom as a cash cow and has always tried to get more revenues from the sector. Two, the operators have failed to keep the pricing and financial discipline, undercutting each other time and again, sometimes induced by the government due to excessive competition and some time on our own. Very clearly, the industry has not maintained financial discipline and the government have not enforced it. The AGR certainly has come as a body blow to the industry, but even without it there is a serious issue of financial health and I think it is about time that we all, including the government, take steps to correct the situation.

SP: Telecom companies typically are investment heavy, and one believes that they would be continuously mapping the trends for technology and competition. While Reliance with its “kar lo duniya mutthi mei” slogan had a history of launching Rs 500-phone and disrupting the market, did the incumbent telecom players fail to foresee what RJio could possibly do?