The Telecom Sector Is Looking At An Existential Crisis; So Are Its Thousands Of Employees

The telecom sector is looking at an existential crisis; so are its thousands of employees

- Abhinav Singh

It is no news that India’s telecom sector has been in trouble owing to a fierce price war and high duties and fees. But the quarterly results released last week have raised serious questions about the future of the sector and thousands of jobs. In the July-September quarter, the losses of four companies—Vodafone Idea, Bharti Airtel, Reliance Communications and Tata Teleservices—totalled up to around ₹1,06,444 crore. A big chunk of this amount is to make provision for payment to the government after the Supreme Court upheld the Department of Telecom’s definition of adjusted gross revenue (AGR).

AGR is the usage and licensing fee paid to the DoT by telecom operators. There was a dispute between the two parties on how to calculate the amount payable. The companies will now have to pay ₹92,642 crore to the government, which includes the original charges, interest and penalties.

“The sector is already reeling under a debt of around ₹4 lakh crore and is in dire financial straits as operators are making negative returns on their investments. The telecom EBITDA (earnings before interest, tax, depreciation and amortisation) continues to contract, while the interest expense of the industry continues to increase. With more than 1.19 billion subscribers, the sector is a key contributor to the Indian economy in terms of consumer benefit, employment and revenue generation, and contributes 6.5 per cent to the GDP,” said Rajan S. Mathews, director-general of the Cellular Operators Association of India. He said the taxes and levies in the Indian telecom sector, which range from 29 to 32 per cent, are among the highest in the world.