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

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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44 Comments on "Kumar Mangalam Birla Blames Jio for Falling Revenues, Profitability of Telecom Industry: Report"

 

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Sudharsan
June 12, 2017 9:55 am 9:55 AM

All these days airtel, Vodafone, Idea were making huge profits by fooling and cheating customers 1GB, 2G data Rs. 250, 1GB, 3G Rs. 300 /-, 1GB,4G data Rs. 400/-

Lovegin
June 11, 2017 6:46 pm 6:46 PM

dear birla i have a humble request to you that please keep data price same as in 2014 which was rupees300 per GB.no doubt you will get good margin in your business.

Satish
June 11, 2017 6:28 pm 6:28 PM

Many are crying that, our telecom companies looting us. But they are not doing charity. They are working for profits. No where in world, we can see such a cheap voice n data plans. You want speed but u r not ready to pay for it. How it’s possible. Only when healthy competition exist, we can expect good investment on network. Already telecom is burdened with 5 lakh crore debt. If same hyper competition continues then only two companies ll rule the market with monopoly rates.

M S
June 12, 2017 4:13 pm 4:13 PM

Same goes for the customer as well, No consumer is spending for charity, so they are going for plans based on what suits best for consumers. Its for them to decide, wether it needs Cheap plans compromising quality for Expensive plans.

Arun
June 11, 2017 8:56 pm 8:56 PM

Even when they were looting the customers down under, with hefty price tags, these telecos did nothing to improve standards. Even the central ministers had to step in beacuse of utterly poor quality service!! So what are you whining about?

Satish
June 11, 2017 10:06 pm 10:06 PM

Are telecom companies piled up with huge cash reserves after this much so called loot. Actually govt is looting telecom companies in the name of licence fee, a spectrum charges.If Mittal started an IT firm instead of telecom firm, he would have got much more wealth. If loot is correct, they would have got no loans and negative cash reserves.

Sandy
June 11, 2017 10:52 pm 10:52 PM

How come Airtel had opened up its operations in other countries then. They have earned good amount of money from indian customers. They had never thought of improving the network to give more data instead they just increased the prise from 200 to 250 to 300 per gb in the name of improvement.
If they would have compete with each other we would have seen the data rate going down and capacity increasing.

Satish
June 12, 2017 12:44 pm 12:44 PM

Competition must be healthy not destructive. Jio is not earning profits either. Airtel has not used it’s profit for getting African business. Only via loans it done acquisitions

Sandy
June 12, 2017 8:15 pm 8:15 PM

Every one knows if jio would have gone in a healthy way avoid cartel would not have let them earned 1 million customers. And with such pace jio would have never reached top 3 position in say 5years. Ambani knows how to tackle these avoid group.

Kaushik
June 12, 2017 11:40 pm 11:40 PM

Mukeshji has learnt well from his past experiences in RCom. No doubt Jio will be a problem to AVOID for a long time to come.

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