The GST will come into force from July 1. Telecom operators are adjusting their billing systems as per the new requirement. The government has fixed 18% GST for telecom services. At present, telecom services attract a lower 15% service tax.
The biggest lending bank to telecom sector, State Bank of India (SBI) has asked for the spectrum as collateral because it is unsure about sector’s ability to service their loan. Lending banks now demand that they should be allowed to take over spectrum allocated to telcos in case of a default.
Aruna Sundarajan, who has recently been appointed as the new telecom secretary, said that she will try to do her best to bring the telecom sector out of its current debt crisis. She said that the government wants telecom players to grow in a healthy and sustained manner and will continue to engage with them in order to understand the magnitude of their problem.
The massive telecom debt has disturbed not only the lending banks but also the government. Recently, the inter-ministerial group (IMG) brainstormed to look for the solution to Rs 4.6 lakh crore telecom debt.
The telecom sector is under great financial stress and the incumbent telcos have blamed Reliance Jio for this mess. Now a report by Jefferies (released on June 21) says that the telecom operators faced 11.7% decline in their revenue due to RJio’s free offerings, which stopped only recently.
Top telecom operators (Airtel, Idea & Vodafone) have raised questions on TRAI's timing of recent paper on refining mobile network test rules; they called it a mask to cover the damage of telecom sector by Reliance Jio. Jio shrugged it off as a non-issue.
The telecom sector is under severe financial crisis and incumbent telcos have blamed Reliance Jio for this misery, while the latter has blamed the former for the telecom sector’s massive debt amounting Rs. 7 lakh crore. Now the Department of Telecom (DoT) is too expecting a sharp revenue fall in the sector in FY18. DoT feels that that the revenue it earns from the sector will fall by 38% in the current fiscal on account of “severe financial stress” and a “rapid decline in earnings” of the operators.
On 16 June, the representatives of top telcos (Airtel, Vodafone and Idea Cellular) made their presentations before a panel of officials from finance and telecom ministries and said, “Jio has misrepresented reality to you.”
Freebies from Reliance Jio had considerably dented the revenue of top telecom operators. Hence, top telcos including Airtel and Idea have urged the telecom regulator TRAI to fix a minimum floor rate for voice and data. TRAI has assured them to look into the matter.
On 15th June, TRAI, the telecom regulator, recommended that the global roaming SIM card companies as well as global calling card providers should pay a compensation of Rs 5,000 to the customers, in case they fail to provide service during a foreign tour.
Although Reliance Jio has defeated all its rivals in data speed and adding new subscribers, Bharti Airtel added more active subscribers than Reliance Jio in April. Airtel added 2.6 million active subscribers, according to visitor location register or VLR, in April compared to Mukesh Ambani-owned Jio's 400,000 active (VLR) customer addition, according to Goldman Sachs, which released its analysis on the Telecom Regulatory Authority of India (TRAI) data which was released on June 13. Visitor location register is a key metric indicating the number of subscribers actively using mobile services.
According to TRAI’s latest data released on 13th June, the number of broadband subscribers increased 2.79% to 284.23 million in April compared to 276.52 million in March. 88.04% market share of the total broadband subscribers at the end of April belonged to leading five service providers - Reliance Jio Infocom Ltd (112.55 million), Bharti Airtel (52.25 million), Vodafone (39.76 million), Idea Cellular (24.09 million) and BSNL (21.58 million).
Reliance Jio is beating all its rivals in almost every filed including speed and the battle for new subscribers. As per the regulator TRAI’s latest data released on 13th June, RJio has beaten all top telcos by adding about 4 million new mobile phone users to reach a consumer base of 112.55 million, though the pace of subscriber additions slowed partially due to ending of free internet.
The telecom sector of the country is under massive debt. Recently, the SBI too sounded an alarm and said that the debt has crossed dangerous limit and urgently needs government intervention. The incumbent telecom operators blamed Reliance Jio for all this misery. But now Reliance Jio has said that these telcos are themselves responsible for their debt woes.
Reliance Jio’s arrival has caused tremendous loss in the existing top telcos’ revenue. Vodafone India, Bharti Airtel and Idea Cellular have registered a nosedive in their adjusted gross revenue (AGR) in the fiscal fourth quarter which ended in March.
According to Arun Jaitley, Finanace Minister, the 17th meeting of the Goods and Services Tax (GST) Council will be held on June 18 at the Vigyan Bhawan where the Council will fix the rate for the telecom sector. The Council has already fixed the rates of more than 1200 goods and 500 services.
The Mahanagar Telephone Nigam Ltd (MTNL) is willing to sell its assets to pay its debt. The monetization plan includes lease or sale of real estate, buildings, towers and ducts. The state-owned telecom operator had already pitched to the Department of Telecommunication to monetise its real estate properties in Mumbai and Delhi. MTNL is aiming to raise around Rs. 4,000 crore from selling from sale and lease.
India’s telecom regulator TRAI wants strict norms for international SIM card and SIM selling companies; the regulator also favours refund to customers in case of service failure during an overseas travel.
BSNL is expected to cut home broadband tariffs to remain prepared against the commercial launch of rival Reliance Jio’s fibre-to-the-home (FTTH) service, which is likely to be marked by a three-month free offer.
According to Kumar Mangalam Birla, Reliance Jio is responsible for causing ‘unprecedented disruption’ in the telecom industry by offering free voice and data. Despite this, Birla expects the sector would return to growth by 2017 last and 2018, as RJio has started charging for its services.
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