TROUBLE BREWS IN THE TELECOM SECTOR

From being the world’s cheapest and fastest growing market, India’s telecom sector is sputtering as it faces life-threatening liability running into billions of dollars, a crisis that may alter the character of an industry that has already seen a painful price war destroying profits and pushed several operators out of the market. Then a Supreme Court order for including non-core revenue in telecom groups’ adjusted gross revenue (AGR) — the figure on which the levies are charged — revived the rivalry between the old operators and Mukesh Ambani’s low-cost upstart Reliance Jio during 2019, but there are signs of a truce with the rival camps agreeing to raise tariffs and also favouring regulator’s intervention in fixing floor or minimum tariffs.

A price war since the 2016 launch of Jio has hit the sector hard. And when on October 24, the SC, on a petition moved by the government, ordered payment of past dues according to its new definition of AGR, the country’s secondbiggest carrier Vodafone-Idea Ltd warned of shutdown if no relief is given. The total dues for the industry ran into a whopping Rs 1.47 lakh crore. Both Airtel and Vodafone Idea have petitioned the government for relief in waiver of interest and penalty, which will halve the dues, and also filed a review petition in the SC. The year, however, brought cheers to stateowned telecom companies MTNL and BSNL. The government recently approved a plum Rs 69,000 crore revival package for the two telcos that were in news over delay in salary payment for the most part of the year.