The Centre’s relief to telcos can only be the first step in efforts to boost the stressed sector
The entry of a deep-pocketed newcomer five years ago and its ‘take-no-prisoners approach’ to tariffs triggered a price war that depressed average revenue per user and bled most legacy telcos operationally into the red. The after-effects of the bruising competitive plunge in call and data tariffs are still being felt by the surviving operators and the issue of a floor price is one among many that the latest reforms completely skirt. To be sure, the Government has sought to address several anomalies in the policy regime including the definition of AGR that had led to the large build-up of dues and protracted and ultimately pointless litigation. Non-telecom revenue will hereafter be excluded from the AGR, a long-standing demand from the telcos. The telcos would also not have to pay any spectrum usage charge for airwaves acquired in future auctions, could share spectrum without incurring any additional cost, and hold the airwaves acquired at an auction for 30 years instead of 20. Several procedural norms have also been simplified. Still, the prospects of the sector diminishing to a duopoly remain high. With Vodafone Group CEO Nick Read categorically telling analysts in July that the firm would not be investing any additional equity into India and Mr. Birla throwing in the towel last month, the Centre’s relief may be too little, too late.
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