Govt Can Help Vodafone Idea and BSNL In Some Ways

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Vodafone Idea and BSNL Could Use This Help From the Govt

The telecom industry remains in a tough spot, and this is not just a story of a few days. Meticulously watching the industry for the last half-decade, we have seen the rise and fall of telecom companies. Truthfully, mostly fall. Many telecom operators which were big names in the country, like Tata Docomo, Reliance Communications, and several others saw their exit from the industry post-2015. However, even with the given players in the telecom industry, namely Vodafone Idea, Bharti Airtel, Reliance Jio, and the public telco, BSNL, the condition is in no way ideal. As we speak, Vodafone Idea and BSNL, are both scrambling to save faces and to avoid the aftermath of poor finances. In such a situation, an impetus from the government is something that can help both companies. Here is something that Vodafone Idea and BSNL could use.

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Govt Help to Vodafone Idea

Being a private telecom operator, Vodafone Idea could only use some kind of regulatory help from the government. But as the centre has already said, if any help comes on this front, then it is more likely to be equal for all. Meaning that if a tariff hike is on the horizon, it only means that all telecom operators will hike tariffs, thus cancelling out the effect of the hike because of the competition at least in case of growth. It is possible that the tariff hike might be a help in absolute terms to the finances, but in the long term, they will only hurt the telco.

Such a situation, in no way, would help the company which is losing subscribers rapidly. On the other hand, there is the issue of Adjusted Gross Revenue (AGR), which is the most worrisome for Vodafone Idea given the quantum of dues it has to pay as compared to others. The other telco in a similar situation is Bharti Airtel, given its high AGR dues, but this is something that Airtel can tackle well because of its strong financials.

However, for the sake of maintaining the balance in the industry and the three-player structure which the govt very promptly wants to maintain, perhaps an exception can be made for Vodafone Idea. It goes without saying that similar to circling vultures, the move would be met with much remorse from other telcos like Bharti Airtel, but this is something that the government can think upon again for the sake of the health of the industry.

Govt Help to BSNL

When it comes to the public telco, BSNL, there is surely the government can do a lot more as compared to Vodafone Idea. The merger of BSNL and MTNL was supposed to solve a lot of problems, but it has done the bare minimum. The revival proposal of the public telecom companies designed by IIM Ahmedabad should be put on a fast track mode. Given that telecommunications is a strategic sector and sees heavy FDI, the government can possibly think upon the idea of pumping more money into the public telecom company to get its house in order. There is also the issue of the 4G network, which needs to be made live as soon as possible since that will be the single most important revitalising element in breathing back life into BSNL.

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