New Delhi, Dec 18 : It was a year of turmoil for the hyper-competitive Indian telecom sector as the balance-sheets of many major players kept bleeding, prompting the government to form an panel to chalk out plans to bail out firms.
Reliance Industries' Jio continued to disrupt the market with its free or low-priced offers while three or four majors fought for the telecom pie tooth and nail. Despite assurances to the sector, the central government's policy did not help: the Goods and Services Tax (GST) hiked the tax on the sector from 15 per cent to 18 per cent.
Also, the Telecom Regulator Authority of India (TRAI) reduced the Interconnection Usage Charges (IUC) to 6 paise from 14 paise per minute from October 1, 2017, putting additional pressure on the incumbents.
However, a few mergers and acquisitions in the sector sparked hopes of a better tomorrow as consolidation would help the majors to cope with challenges better, even as the cumulative debt of telcos rose to around Rs 4.6 lakh crore and the revenues fell. The sector's adjusted gross revenue fell to Rs 30,759 crore for the quarter ending September 2017 -- a year-on-year decrease of 18.1 per cent.
"This is a consequence of a number of developments over the years, including the entry of new operators in 2009 and the voice tariff war. This was followed by expensive auctions for spectrum (2016), needed by the telcos to offer communications services," Rajan S. Mathews, Director General, Cellular Operators' Association of India (COAI), told IANS.
"In 2018, consolidation in the sector is likely to take shape and the telcos will get the benefit of synergy in operations and the overall costs are likely to come down. Eventually, pricing power could also return, enabling longer-term sustainability overall," he added.
However, Mahesh Uppal, Director of consultancy firm Com First, feels competition from Reliance Jio would continue to hurt margins of the incumbents.
"With Jio guaranteeing free calls to its subscribers, other players will find it difficult to sustain revenues from voice calls. They will be forced to do the same. They will then compete aggressively in the market for data services, especially by providing larger data packs at even cheaper prices. It is not clear whether players will compete more vigorously on quality of service. This might take more time," Uppal told IANS.
But Amresh Nandan, Research Director, Gartner, said Jio's disruption with free voice and data offers would eventually subside and become normal.
"Beyond a point, quality and reliability of service matter most. As that takes centre-stage, which has started to happen, free or even discounted services won't help. If Jio comes up with products beyond connectivity -- that enables greater interaction and transactions for consumers with necessary quality and reliability, then the competitive scenario may change," he said.
Talking about mergers and acquisitions, Uppal said the sector was in the process of reaching an optimal number of players. "I expect the eventual survivors to be Airtel, Jio, the combination of Idea and Vodafone and the government-owned MTNL-BSNL," Uppal said.
Nandan said mergers and acquisitions were good for the market from the economic perspective.
"Four telcos are dominant in the market and it should lead to a better scenario. However, real value from these deals will take time. These M&As are yet to reach operational culmination, which in itself will shake-up things a bit more," he added.
"As far as consolidation is concerned, no market in the world has more than five telecom operators, but in India, there were more than 10. In 2018, the Bharti Airtel-Tata Teleservices-Telenor combine and the Idea Cellular-Vodafone combine would take shape," said Mathews.
The country saw almost 40 per cent jump in 10 months in the number of wireless broadband users from 217.95 million at the end of December 2016 to 322.18 million users at the end of October 2017.
The regulator also came up with recommendations on net neutrality during the year, largely in agreement with suggestions made by the industry on "no blocking, no throttling, no fast lanes", while allowing reasonable traffic management.
However, according to Mathews, the industry was disappointed that the authority did not adopt their recommendation "to have a wider approach to net neutrality, where issues of OTT (over-the-top) players, definition of net neutrality to include issues around connecting the next one billion unconnected users and national development priorities."
The industry is now awaiting norms for in-flight connectivity, which is scheduled to come from the regulator by the year end.
The highlights of the year were:
** Announcement of merger of Vodafone India and Idea Cellular
** Airtel's MoU with Tata Teleservices & Tata Teleservices Maharashtra to merge their Consumer Mobile Businesses
** JioPhone's digital empowerment of 50 crore feature phone users at an effective price of zero
** Reliance Communications completion of merger with MTS
The telecom buzzword for 2018 appears to be 5G -- smarter, faster communication. But that's going to take around two to three years for full deployment.
SURYAA NEWS, synonym with professional journalism, started basically to serve the Telugu language readers. And apart from that we have our own e-portal domains viz,. https://www.suryaa.com/ and https://epaper.suryaa.com