Why Telecom Sector Increase Their Price

Vodafone Idea and Bharti Airtel also have an outstanding debt of over ₹1 lakh crore each Last month, Jio followed Vodafone Idea and Bharti Airtel to announce its move to increase tariffs. The latter two operators notably reported combined losses of Rs. 74,000 crores in the quarter ending September 2019. In an interview with The Wire, Rahul Khullar has said that it’s difficult not to agree with Vodafone CEO’s comments that there is regulatory bias in India. Khullar also added that if the government doesn’t wake up to the magnitude of the current crisis, the industry could be headed for a duopoly with only two companies left standing. “From a domestic investor perspective, there is a concern that why didn’t the government wake up and sort out this telecom mess [AGR issue] earlier. Why did it wait for this crisis? “I think they have not come to grips with the magnitude of the problem and the gravity of the situation. And they don’t understand, sadly speaking, what is happening in the industry and the magnitude of the money that is involved.” “It is definitely the case that if this is not resolved in some way, then you are headed for a duopoly,” Khullar said, adding that the revival of BSNL and MTNL are mere symbolic acts that are unlikely to add to the competition in the sector.

Sometime ago Prime Minister Narendra Modi had also publicly asserted that his government did not make policies for “Ambanis”. However, this claim too is being questioned as the existing telecom operators such as Vodafone, Bharti Airtel, Idea Cellular and others have openly accused the Telecom Regulatory Authority of India (TRAI) of showing a pronounced bias towards Mukesh Ambani’s Reliance Jio which has entered the market on a trial basis and promises to provide a slew of packaged services, including voice and data, at very high speeds. Jio has already spent Rs.1 lakh crore on this prestige project and the market perceives it as the most ambitious ever to come out of the Reliance stable. In short, it is seen by the Mukesh Ambani Group as a project too big to fail. But the moot point is whether the regulator and policy makers have also started seeing it as too big to fail! That is where the real problem lies.

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