Kumar Mangalam Birla Blames Jio for Falling Revenues, Profitability of Telecom Industry: Report

By June 10th, 2017 AT 9:19 PM

Aditya Birla Group chairman Kumar Mangalam Birla, in a letter to shareholders of Idea Cellular, reportedly blamed Mukesh Ambani-led Reliance Jio for causing unprecedented disruption in India’s telecom sector, which has led to two percent decline in annual revenues in 2016-17 fiscal, according to an ET report.

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India’s telecom industry is facing a decline in revenue and profitability on account of competition intensified by the entry of Reliance Jio. The sector is currently going through a major consolidation drive, powered by the entry of Reliance Jio, which launched commercial services in September 2016, disrupted the market with the free data and voice services, which officially ended on March 31, 2017. The telco is now charging for its services under its Dhana Dhan Dhan plans that offer unlimited voice and capped data for three months at affordable rates.

“It has been a ‘Period of Telecom Discontinuity’, permanently changing mobility business parameters,” Birla was quoted as saying. He added that financial parameters for all mobile operators have sharply declined.

Birla, however, hoped that the telecom sector would return to growth in 2017-18 with Jio starting to charge for its services, “albeit very slowly”.

Anil Ambani-led Reliance Communications is merging operations with Sistema Shyam Teleservices, and separately merging wireless operations with Aircel to give birth to a new telco, AirCom. Bharti Airtel is also acquiring Telenor’s India operations besides acquiring Tikona’s 4G spectrum and business to strengthen its 4G play against Reliance Jio.

Birla said that Idea Cellular remains committed to the process of building world-class broadband services despite facing short-term challenges. Idea Cellular will capitalise on the emerging opportunities in mobile voice, digital content, mobile banking and wireless data business as telecom market invariably move towards consolidation with five major providers, he added.

Aditya Birla Group-owned Idea Cellular is currently in a process to merge operations with Vodafone India to create India’s largest telecom operator. Both the companies have filed a joint merger notification with the Competition Commission of India (CCI), and the Scheme of Arrangement has been registered with SEBI and stock exchanges for their approvals.

“The combined company would become the leading communication provider in India with about 400 million customers, 35 percent customer market share and 41 percent Revenue Market Share…,” he said.

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