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BSNL says non-investment in 2G to impact revenue, harm market competitiveness

State-run telecom operator BSNL has written to the department of telecommunications (DoT) saying that non-investment in 2G network will put its key revenue stream at risk, and cause a significant disadvantage to compete in the market. Around 70% of the company’s customers are on 2G.

BSNL’s warning came after a DoT committee recommended that no 2G equipment should be purchased by BSNL, even for replacement.

As per sources, the company wrote to the DoT after the committee refused to take into account its concerns.

“Regarding continuation of 2G services, the committee has observed that BSNL should migrate all its subscribers to 4G as 2G services are expected to go down significantly. In this context, it is mentioned that 2G subscriber base of all telecom service providers, except Reliance Jio, is still significant and cannot be ignored,” BSNL said in the letter, a copy of which has been seen by FE.

As of December 2019, around 60% of Vodafone Idea customers were on 2G, while Airtel had 47% 2G users and BSNL close to 70%. “With such a significant 2G subscriber base, it is impossible to migrate to 4G-only network as substantial revenue of BSNL mobile service is from 2G customer base,” the company said.

The DoT committee, which has submitted its recommendations for the upcoming 4G tender of BSNL, did not agree with the company and cited examples of countries like Japan, Singapore, South Korea, Taiwan, Sweden, Norway and Switzerland, which have stopped 2G services.

“In this regard, it is stated that these countries are economically very developed and having high per capita income. Therefore, development of telecom network in these countries cannot be compared with India,” BSNL said.

Discontinuation of 2G services is going to hit BSNL the most as the company has been adding 2G customers over the last year, primarily due to Airtel and Vodafone Idea making a minimum monthly recharge mandatory for subscribers. As a result, many low-income users shifted to BSNL, which still offers plans that come with a long-term incoming call facility. Financial Express

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