Telcos Are Gasping For A Top-Up

The massive financial burden arising from adjusted gross revenue dues is threatening to undo telecom firms. To pay up and continue in business, they need capital. Getting that, however, is unlikely.

- Aveek Datta

India, as they say, is a land of paradoxes. It is the land where tony high-rises coexist, and often share a boundary wall, with shanties; and Audis and BMWs dominate pothole-riddled streets even as the mass rapid transport system bursts at the seams with the weight of India’s massive population.

There is another study in contrasts one can add to this list: India’s telecom sector. The number of mobile phone users in the country has steadily climbed to 1.18 billion, smartphones are flying off the shelves, and yet, the number of telecom operators in the country has progressively shrunk, and their health has deteriorated. Ask any average Joe on the street and he will vouch that it is almost impossible to have a telephonic conversation these days without experiencing a call drop.

Two broad phases of consolidation since 2010, and an aggressive tariff war, have caused the demise of many mobile telephony service providers in the country, with only three large private ones surviving—Vodafone Idea, Bharti Airtel, and Reliance Jio Infocomm (Jio). Recent developments are threatening to further derail the industry.

A recent ruling by the Supreme Court threatens to reduce the Indian mobile telephony market to a duopoly, and even if that somehow doesn’t happen, the financial health of the sector is bound to suffer, which will most likely translate into inadequate investments in network upgrades and, therefore, poor quality of service.