Ravi, Former Chairman, BSE, and Managing Partner, Ravi Rajan & Co

The Indian telecom industry has been in the eye of the storm in the past few years. Cut-throat competition, predatory pricing, huge capex requirements and adjusted gross revenue (AGR) dues are amongst the main issues that have been witnessed by the industry. The industry comprises segments such as infrastructure, mobile operators, mobile virtual network operators, equipment, broadband and 5G. The economic value of the industry is approximately $200 billion.

There was a lot of pessimism about this industry in 2019, pre-Covid. During the lockdown period, the sector’s infrastructure and efficiency were put to the test. The usage of telephones, cell phones and the internet was far higher as they became the source of connectivity to the outside world. The total number of telephone subscribers in India has reached 1.16 billion as of April 30, 2020. There are over 1.14 billion wireless subscribers and 19.92 million wireline subscribers in the country.

With brands like Bharti Airtel and Vodafone Idea losing 5.26 million and 4.51 million customers respectively in April 2020 as the lower-income group audience and migrant workers surrendered their mobile connections amid their personal financial crisis, the only winner seems to be Jio, which added more than 1.57 million customers even during the lockdown period.

During Covid times, the overall traffic has jumped over 10 per cent and streaming platforms have witnessed a 20 per cent spike in viewership. According to reports, the mean mobile and broadband downloads had fallen in the month of March due to a strain on the network. Owing to lockdown conditions, the net subscriber addition fell below 1 billion as against the average monthly net additions of 3 million subscribers. The industry had a debt of Rs 4.4 trillion as of March 31, 2020.

This is a highly competitive industry and any change in the tariff plan can result in the migration of subscribers to other telecom operators. Given an easy mobile number portability process, even old subscribers can easily migrate to a new telecom operator. The change in tariff has huge implications in terms of revenues and subscribers. However, telecom operators in their marketing strategy have differential tariff plans for users who use cell phones and data. Customer preferences need to be mapped so that tailor-made tariffs are made available to subscribers. There is no major scope for radical changes in tariffs due to the existing competition.

Jio Platforms’ valuation surged to $6 billion in the time of the pandemic, primarily after a series of fundraisings. The fundraising, which was approximately around $10.7 billion, was coupled with measures to reduce the opex. Jio is the only operator that has attracted investors and has reduced the burden of debt during this period.

The first spectrum allocation took place in 1994 and the last spectrum auction was in 2018. The last spectrum put on sale was 302.2 MHz of 1800 and 46 MHz of 900 MHz wide spectrum. The spectrum licences are valid for 20 years. Reliance Jio is the only company to have all-India 4G licences across 14 circles. The 5G auction has been postponed till 2021 in India.

In a statement made  in 2015, by Prime Minister Narendra Modi said, “I dream for Digital India where mobile and e-banking ensures financial inclusion.” This vision has become a reality with an increase in subscribers, broadband and the number of bank accounts. The lockdown has brought about a paradigm shift in consumer habits and has spurred a movement from cash transactions to digital payments. With the help of enhanced telecom infrastructure, the Government of India has been able to make direct benefit transfers to 320 million people during the Covid-19 crisis.

The government must take steps to eradicate the legacy issues of the telecom industry. The capabilities of 5G technology and the planned first net carrier-grade public safety network must be implemented. Long-term funding for the telecom industry along with granular guidelines on traffic would enable multiple players to survive. Further, there is a need for clarity in policymaking and regulatory changes to ensure that the uncertainty surrounding this industry is dispelled. The Indian telecom industry has a bright future and will continue to evolve even after this crisis, once all the right steps are taken.