- BSNL and MTNL received a relief package from the government
- AGR verdict was the biggest blow to the telecom companies
- Data tariff hike was another major event this year
The year 2019 has been a very happening one for the Indian Telecom industry. This was a year full of ups and downs and many waves. The telecom operators were mostly locked in a battle for the large part of the year, and the effects of the data tariff war definitely spawned in the entire industry. The future of the telecom industry was also decided somewhat in this year with a lot of major decisions being taken by the Telecom Regulatory Authority of India (Trai) and the Department of Telecommunications (DoT). The fate of the 5G auctions, when the 5G network would come to India and other significant decisions also defined the telecom industry this year. Let’s take a look at all the major milestones that happened this year and were crucial to the telecom sector.
AGR Issue for Telecom Companies
Although the AGR decision by the Supreme Court only came into headlines towards the end of the year, it was the biggest blow that the telecom companies received. Vodafone Idea and Bharti Airtel were the companies which got the worst share of this blow. The Supreme Court mounted these two companies with dues worth Rs 90,000 crore and the entire telecom industry with dues worth Rs 1.4 lakh crore. The AGR issue snowballed for the telecom companies since now the SC ordered to include non-core services as well while reporting the AGR. Now the telecom companies have the pressure of paying this amount before January-end. However, the fate of Vodafone Idea also depends on whether or not it would be able to pay its dues. Meanwhile, Airtel has decided to raise funds to pay off its dues.
Delay in 5G Auction
The 5G Auction was supposed to be held in 2019, but with the year ending now, still, there is no 5G auction in sight. However, as per the DoT, the 5G Auction is to be held in March 2020. But, given the grim financial condition of the industry, there is little to no hope about the participation of the telecom companies in the 5G Auction. Also, before it was predicted that in 2020, 5G would make its way to India, but now the estimates peg that the technology might not really make its way to the country before 2023 and a commercial rollout only seems possible by 2025 only.
With all of this happening, the only good thing for the telecom industry and the companies came in the form of the data tariff hike. Towards the end of the year, the telecom companies came together to increase the prices of their plans by around 40%. Although this move was not taken well by the consumers, still it is expected to improve the financials of the telecom companies if not help them in paying off their AGR dues. In the tariff hike, the Mukesh Ambani led telecom operator is the telco which is expected to benefit the most. This tariff hike will also help the telecom companies in upping their ARPU (Average Revenue Per User) which remains a major industry parameter.
Fall of Vodafone Idea
If there is any telecom operator which had a rough year in 2019, it was surely Vodafone Idea. Although the plans of merger and the network integration was expected to improve things for the telecom operator, the results were quite the opposite. Since the start of the year, Vodafone Idea subscriber base continued to bleed because of the network integration exercise and the hit of the AGR dues badly wounded the telco. Even now, the fate of Vodafone Idea rests on the relief which the telco is hoping for from the government. The finances of the companies have gone down owing to the brutal hits which it faced.
BSNL and MTNL Merger
Other two telecom operators which were facing the wrath of the data tariff war were the state-led telecom operators, BSNL and MTNL. These two companies continued to have poor financials when finally the centre decided to swoop in and help the finances of the companies. It was decided that the companies would be merged for better management, and also a Voluntary Retirement Scheme (VRS) package, and 4G spectrum allocation was promised to both these telecom companies.
Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.