Distress in Telecom Industry in India

Telecom sector is in a mess. Back in February, 2018, I had written a blog post titled “Telecom Companies shutting down in India”. The trigger for me was the shutting down of Tata Photon / Indicom services. It was clear to me at that point that more telecom companies were going to shut down. But I did not know that the process will be so fast. 

Idea and Vodafone had to merge in order to survive. Today, Vodafone Idea has posted a quarterly loss of over Rs 50,000 Crores – which is record high for any company in India. A year ago, the company had posted loss of about Rs 5000 Crore in the same quarter. Vodafone Idea’s revenue from operations has halved to about Rs 10,000 Cr from Rs 22,000 Cr earlier. The company is asking for help from government and its owners have declared that they would not invest any further money into the company and would start insolvency procedure if help from government is not offered. Although I am against government spending tax payers money to help private companies survive, I would rather focus on this news from the point of view of urgency and seriousness of matter.

Telecom regulator TRAI must stop unnecessary policy changes in the name of benefitting the consumers. Also, technology changes must not be “forced” upon companies, as I had argued in my previous blog post. Telecom companies in India have created a communication revolution in our country and today, even the poorest of the poor own a phone and even illiterate folks are using a smart-phone. No government or a government regulator could have revolutionized our country in this manner, as our private telecom companies have done. These companies have not only generated millions of jobs directly but are providing necessary infrastructure which is essential for millions other jobs to exist today and grow. TRAI and government of India must create an eco-system where telecom companies are able to generate enough revenue and profits and are able to survive. Competition is essential for prices to be low and for competition to exist, there needs to be multiple telecom companies in the space.

I call for strong government action against TRAI for being a mere spectator to the telecom “mess” and even doing changes which have destroyed some of the great telecom companies in India. I hope government of India will not help any loss making private telecom company financially, but would make necessary policy changes to ensure multiple players in the telecom industry.

- Rahul

Disclaimer: Views expressed are personal.

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