The story of the Indian Telecom industry has been a pretty painful one with the exit of multiple operators in the last few years. On top of this, the state-run operator Bharat Sanchar Nigam Limited (BSNL) and Vodafone Idea (Vi) are barely surviving in the cut-throat market. Let’s not dive into reasons why these operators haven’t been able to stay afloat gracefully, but focus on what needs to be done.
Right now, apart from Jio, there’s no operator who is financially comfortable. Even though Bharti Airtel is cash flow positive, the telco’s profits are diminishing and there’s substantial debt in the books. If things don’t change any time soon, it would result in the downfall of the current market structure of 3 private operators plus one state-run operator.
This market structure is absolutely the best for India, even in the long term. This is because operators won’t have to battle it out with other 10 operators to get spectrum and because of that users will be able to access seamless network services from the same operator throughout the country.
Sunil Bharti Mittal Says Government Must Step In
The Chairman of Bharti Enterprises, Sunil Bharti Mittal recently said that the telecom sector of India needs long-overdue support from the government. As per a PTI report, Mittal said that because of the existing environment, Bharti Airtel had to pay a toll on its finances in the FY21.
To an extent, I agree with the words of Mittal. The sector is in deep financial trouble and the government could help the ailing telcos by redefining the AGR dues, thereby excluding the non-telecom revenues from being a part of the calculation.
Further, the government must come out with a much-needed relief package as soon as possible. Without some sort of relief, the industry is going to get more pressured and even the investors won’t be too keen on putting their money in the telecom market.