Editorial

Published: Dec 29, 2021
Updated: Dec 29, 2021

Don’t kill the telecom goose

The Indian telecom sector has made rapid strides, emerging by April 2021 as the second largest globally with a total subscriber base in the country of 1,203.47 million – very nearly the population of India! It is estimated that over the next five years, the rise in mobile phone penetration and a decline in data cost will add 500 million mobile and internet users, creating a slew of opportunities for new businesses.

However, the government’s attitude towards the telecom industry till now has been regressive. Only now has there been some welcome change in New Delhi’s approach with the likelihood of some relief for the debt-stricken telecom sector, which is saddled with debts of over Rs 8 lakh crore. As is well-known, Vodafone Idea is in the worst situation and is in fact struggling for survival.

The government’s more liberal approach towards the beleaguered industry has not come a day too soon as there are only three major players left where earlier there were about a dozen. And of these three ‘survivors’, Vodafone fares worst of all as owes the government nearly Rs 106 lakh crore towards AGR (adjusted gross revenues). The British company could not have dreamt when it entered Indian shores that one day it would be staring at disaster on account of the totally indifferent attitude of successive governments. It almost seems as if successive governments did not want Vodafone to do in this country.

It would be a body blow to the telecom industry as a whole if Vodafone is finally forced to shut shop. In such a scenario, with only a duopoly remaining, consumers will almost certainly face the prospect of growing tariff hikes. It needs to be said that Vodafone is an accomplished player in the industry and has performed very well as far as technological excellence and customer service are concerned.

Prime Minister Narendra Modi has already taken a momentous decision to withdraw the retrospective tax law, and now the government should go a step further by deferring payment of dues by companies like Vodafone which are crushed under mountainous debt so that they can improve operational profitability. Again, the government has charged too high a price for spectrum and hence it will be quite logical if spectrum usage charges (SUC) are lowered to offer some more relief to telecom companies.

Undeniaby, mobile phones have been a boon to people and the country as a whole. The rapid growth of online payments over the past few years is a case in point. This could not have happened without widespread access to mobile phones and digital services like UPI (united payments interface). For another, online classes for millions of young persons during the pandemic phase would not have been possible without mobile communications.

Thus, a robust, multi-player telecom sector is vital for citizens’ connectivity and accelerating India’s economic growth. The government has taken a step in the right direction with the scrapping of the retrospective tax law. Now, it should use farsighted policy decisions to nurture the telecom sector in the interests of healthy growth of the industry. Viewed in the context of rising population and improving incomes, the country needs one more player besides Bharti Airtel, Reliance Jio and Vodafone.