The telecom industry has become a bloodbath and is no field for new players now. Even seasoned companies are finding it hard to hold their ground in the extremely competitive environment that has grown to severe heights in the last few months. The falling data rates, the expectations of the shareholders and the customers alike have to be managed, and the COVID-19 pandemic has added to the worries by quite a margin. In such a situation, it is obvious for the companies to look towards the government for some relief in financial matters. This is exactly what Vodafone Idea (Vi) seems to be doing with more eagerness as compared to Reliance Jio or Bharti Airtel. But that does not mean that the other two players don’t need it as much. The truth remains that the telecom industry stands in financial ruins.
Relief Might Allay Security Fears for Government
Perhaps the first thing that the Department of Telecommunications (DoT) can arrange to do for the telecom companies is to give them a payment moratorium for the spectrum dues which have been purchased in the month of March earlier this year. The moratorium might mean a single nod for the government but for the telecom industry; this might be a big boon as it will not only reduce their financial worries but will also free up their resources which can be diverted to other constructive events such as expenditure towards deployment of good quality equipment.
The government has already banned the usage of Chinese-made equipment by the public telecom operator, BSNL. This means that ZTE and Huawei are likely to turn to the other private telecom operators with prices that are attractive. On the other hand, Nokia and Ericsson are some companies that will probably be trumped by Chinese equipment manufacturers. This might be a thing of worry for the government. Hence it is only obvious, that by giving financial relief to the telecom companies, the centre will be ensuring increased security in the telecom equipment sector. By freeing up the financial resources of the private telcos, it will allay its security concerns of an increased presence of Chinese equipment on Indian soil.
Tariff Hike Likely to be a Step Back for the Industry
The telecom companies have already started cutting their costs by deploying chatbots instead of call-centre employees. Given the situation, a tariff hike also seems to be brewing under the surface, but it goes without saying that such a tariff hike might cause a slump in demand which might further put the telcos under stress. Also, a unilateral tariff hike might pave the way for harm to the four-player structure, which the government desperately wants to maintain in the industry. Given all these situations, it is only fair that the government extends a helping hand to the telecom companies in matters of GST, spectrum dues, and equipment deployment because it not only helps the telcos survive but also charts a smooth territory for the 5G deployment which lays ahead.
Such a relief seems like a need of the hour because the 5G costs, as compared to other developing and developed countries, already seem to be sky-high, which might mean a not-so-smooth ride for the consumers when the 5G technology actually arrives. The well-intentioned idea of providing relief to the entire industry and not just one telco is a welcome step discussed by the DoT.
