On the one hand, the second edition of the India Mobile Congress was rife with showcasing of new technologies such as facial recognition, connected cars, drones by service providers and equipment makers alike, on the other hand there was ruing of “significant pain” in the telecom sector.
Speaking at the inaugural session of the event, Bharti Airtel Chairman Sunil Mittal said that the telecom sector remained highly taxed like the tobacco industry, and that the consolidation in the sector has come at a cost of $50 billion in investment write-off and job losses.
“In India, for every Rs 100 that mobile operators earn, nearly Rs 37 goes towards one form of levy or the other. I cannot see how this contradiction can exist…where on one hand we have PM’s vision of digitally enabled India …which requires tremendous amount of investment, on the other hand we keep the spectrum prices and our licence fee very high…and of course the GST is at 18 per cent which almost is the highest tax bracket,” Mittal said on Thursday.
He also pointed out the industry has now reached the “right structure” but noted that the consolidation of the Indian telecom market did not take place in an orderly manner except in case of Vodafone Idea merger. “Many operators had to go through significant amount of pain and job losses, nearly 50 billion dollars has been written off and now we have arrived to a point where we are in the right industry structure,” Mittal exhorted. He said telecom markets globally are moving towards having 2-3 operators and added that in India, too, consolidation had paved the way for three private players and one state operator to cover over 1.2 billion people. Notably, earlier this week, Tata Sons had written off its entire investment of Rs 28,651 crore in loss-making telecom arm Tata Teleservices. Tatas had sold off their consumer telecom business to Bharti Airtel.
While Mittal spoke of the financial troubles being faced by the sector, Reliance Industries Chairman and Managing Director Mukesh Ambani pushed for universal connectivity and “extreme affordability” to realise ease of living for all. “We have to be mindful that data is the most important resource in this new world, and India and Indians will generate humungous amount of data. It is important that we utilise this rich-resource for the benefit of India and Indians, with adequate safeguards. With universal connectivity and extreme affordability, our Prime Minister’s inspiring idea of ease of living for all can now be realised. With world-class digital infrastructure in place…India is now ready to not only embrace… but actually lead the Fourth Industrial Revolution,” Ambani said.
At the India Mobile Congress, Reliance Jio displayed potential uses of high speed 5G network technology. The company, together with Ericsson, demonstrated trial 5G network to drive a car prototyped at Reliance Corporate Part (RCP) in Mumbai from a remote location, and also showed a 5G-enabled drone that could perform security surveillance and threat identification by monitoring on a real-time basis.
It is noteworthy that established operators like Bharti Airtel, Vodafone Idea Ltd are in the midst of a tariff war following the entry of Reliance Jio in September 2016. Jio’s cheap data offerings have dented the financial metrics of incumbent operators, deepening the impact of regulatory decisions like cut in termination charges, even though the market is witnessing rapid growth in consumption.