- Vodafone Idea is currently in the process of raising money via rights issues
- The industry currently remains under a debt of Rs 8 lakh crore mainly due to pending spectrum payments
The current telecom market leader, Vodafone Idea Limited (VIL) has dismissed the idea of a duopoly in the market saying that the current industry structure with three major telecom players at the apex will be maintained, ET Telecom reported. The telco also said that this would be in the best interest of the consumers.
Government Has Best Interest of Industry in Mind: Balesh Sharma
Balesh Sharma, CEO of Vodafone Idea Limited said, “They (policymakers) have very clearly said so. It is not in the interest of consumers. From whichever political point of view you look at, it will not be received well.” Sharma also added that the government has got the best interests of the industry in mind as it wants the health of the sector to recover. He further added that the government wants the situation of telcos offering services below cost and the tariff structure to change for good.
The executive added to his words, “If you look at the National Digital Communications Policy (NDCP) itself, it very clearly calls out that this (telecom sector) should not be seen as revenue creator and should be seen as critical infrastructure. If you want to do digital India and want investments in the future, then the industry has to make a comeback and become a level playing field.”
To recall, back in 2018 the two major telecom operators, Vodafone India and Idea Cellular were forced to merge their operations in the light of falling revenues, and massively declining profits after the entry of the Mukesh Ambani led telecom operator, Reliance Jio, into the sector. The telco’s entry also started rapid consolidation, hurt revenues and left the industry with only three major telecom operators. Currently, the sector remains under a reeling debt of Rs 8 lakh crore mainly constituted by spectrum payments.
Telcos Strapping Enough Cash for the Long Haul
However, Balesh Sharma holds an optimistic vision of the industry as he pointed out that the sector has already seen some amount of stability almost after two years of intense data tariff war. About this, he said, “The change in the pricing in the marketplace will be for the unlimited bundle. We believe very strongly that will happen for various reasons, but we don’t know when.”
Sharma also said to ET that currently they are limited on the spectrum but unlimited on demand. What’s interesting to note is that according to Sharma, the competition in the industry is presently at the “optimum” level. He also said that the three major telcos will be well-funded for the long term even though they are burning cash at an unprecedented rate now. Vodafone Idea itself is in the path of raising Rs 25,000 crore via a rights issue. Similarly, Bharti Airtel is also in the process of raising money.
In a similar development, Mukesh Ambani led telecom operator has demerged its fibre and tower units to ease the balance sheets and to make it easier for monetisation of its assets. As per Sharma’s statement, the telcos are eyeing for the long haul with these moves.
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.