- The telecom sector is such an extremely vital cog in the growth of the country in these times of digital revolution that any signs of discomfort plaguing the very foundation of the edifice are bound to reflect badly on the already battered economy. The Union Government’s tremendous push to embrace the digital medium as the flagbearer is an ambitious endeavor that will go a long way in empowering millions with better digital tools to ensure easier access to numerous public services. For this stated vision to fructify, the telecom sector has to flourish unhindered without getting burdened either with lack of competition from well-established players or unyielding regulatory hurdles stalling envisaged progress. A fine balancing act is the need of the hour.
PC: Root Info Solutions
- As you are aware, India’s telecom market was hypercompetitive just a decade back. As consumers, we freely expressed apprehensions by cribbing about there being too many mobile service providers for comfort. Due to the meltdown and prevailing cut-throat competition, the situation has slowly reversed with many players walking into the sunset unable to stay afloat. It may happen so that only two major players will be left in the fray for all practical purposes. It’s come about as Kumar Mangalam Birla, one of the promoters of Vodafone Idea has asked the Government of India for support to remain in the race. Note that the company has a market share of about 24%, the third-largest after the market leaders Reliance Jio and Bharti Airtel, respectively.
- Two of the public sector companies viz. BSNL and MTNL collectively having around 10% share are rendered non-players for all practical purposes. Keen observers are aware that Vodafone’s problem is twofold. It is bleeding and existing promoters, including Vodafone Group, have shown no inclination whatsoever to invest more to resurrect. Reportedly, potential investors want some government guarantees including an administered floor price above the cost of services. Of course, a return to administered pricing of yore is not in the public interest and cannot be expected to be acceded to by the authorities. There are also talks about predatory pricing, appropriated by Reliance Jio, which has provided great tariff relief to happy consumers, ending the debate at once.
PC:
- Against this backdrop, the Government of India should use the Insolvency and Bankruptcy Code that also ensures banks having lent to Vodafone won’t suddenly have to declare piles of bad loans. Direct intervention by the Government by extending a fresh moratorium on spectrum payments will help Vodafone but the catch here is the same must be extended to all players. Further, such a move will be a temporary salve, not a solution. Rather than have a duopoly and viewing telecom firms as just sources of revenue, bolstering competition is in the best interest of the nation. Therefore, GOI should lower at least some of the many levies that are raised from telecom companies and also promise regulatory stability. With such moves, Vodafone Idea might just survive!
