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Marching Ahead!

With the Telenor acquisition completed, and the Vodafone-Idea merger imminent, the Indian telecom services industry is in the final phase of consolidation. The issue that is now being addressed is reviving the industry from being in a constant state of artificially suppressed pricing, functioning below cost, and continued losses, in the backdrop of mounting debt.

For the January-March 2018 quarter, Bharti Airtel reported its first ever quarterly loss, a 77.79 percent y-o-y fall in consolidated net profit at Rs. 82.9 crore. Idea’s net loss for the quarter widened to Rs. 930.6 crore from Rs. 325.6 crore a year earlier. Vodafone India’s loss for the year stood at Rs. 15,933.6 crore. Debt for each telco has been increasing, for instance, Bharti Airtel’s consolidated net debt rose almost 45 percent over the last 4 years to Rs. 95,228 crore in March 2018, while Vodafone’s corresponding figure is Rs. 62,100 crore. In contrast, capital spending continues, while competition pushed prices down 40 percent in voice and 86 percent in data y-o-y; no doubt the data traffic as a result quadrupled in FY 18.

The government too did not fare well. Telecom license fee collections declined by 18.78 percent, from Rs. 15,975 crore to Rs. 12,976 crore. Industry AGR slumped 18.87 percent to Rs. 1,60,814 crore in 2017, from Rs. 1,98,207 crore in 2016. The fall in overall spectrum usage charge inflows in 2017 is even bigger, plunging nearly 33 percent, to Rs. 5,089 crore from Rs. 7,574 crore in 2016. And monthly ARPUs of the industry from GSM services, including 4G LTE, fell 31.40 percent to Rs. 81.39 in 2017 from Rs. 118.65 in the previous year.

The National Digital Communications Policy, scheduled to be implemented by July 2018, is seeking to address the current levels of stress, to put it mildly. It aims to enable the sector to consolidate and stabilize in the short term and unleash fresh investments in the long run. We might just see industry revenue growth in the mid-single-digits in 2018, following a decline in 2017.

We look forward to meeting our readers at CommunicAsia 2018, Singapore.

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