Troubled by declining revenues, rising debt and heightened competition, telecom operators on Friday sought relaxation in levies and support to take on Reliance Jio. Operators, including Airtel, Vodafone and Idea Cellular, met the inter-ministerial panel looking into the woes of the sector, and sought a reduction in the licence fee from 8 per cent to 3 per cent, and a maximum GST rate of 12 per cent.
“In 2016, we witnessed the entry of a new operator — RJio. The new entrant adopted a predatory pricing approach... As a result industry revenue has declined by more than 20 per cent over last three quarters and the return on capital employed is likely to be negative... we have asked for support from the Centre since telecom is key to the Digital India vision,” said one of the operators.
Reliance Jio, meeting the panel earlier, said the operators were to blame for their financial stress. According to RJio, their debt has gone up as they did not invest in technology.
Countering this, Airtel told the panel that it had made a capital expenditure of Rs 1.25-lakh crore since 2012. “To create infrastructure for Digital India, an investment of Rs 2-lakh crore will be needed by 2020, but key players are under severe financial stress,” Airtel told the panel.
In its presentation, Idea said the industry has lost Rs 8,200 crore revenues in 2016-17 second half over the first. “The only solution is to have floor prices for voice, SMS and data services so telecom businesses generate profits to invest and then compete based on quality of service.” – The Hindu Business Line