Is the govt finally taking note of Rel Jio’s impact?
High-level meetings centred on Reliance Jio Infocomm Ltd that preceded the telecom regulator’s order halting a complimentary offer from the Mukesh Ambani-run operator seem to suggest that the government has taken note of the impact of free services on the industry and its own revenue.
A day before the Telecom Regulatory Authority of India’s (Trai’s) order, telecom minister Manoj Sinha met officials to discuss Reliance Jio’s promotional offers and their impact on the telecom sector and licence fee collection, two people familiar with the matter said. Licence fee collection in the March quarter is expected to decline 28% to ₹2,300 crore from ₹3,165.8 crore in the December quarter, these people said, asking not to be identified.
Sinha was briefed by his bureaucrats about the industry’s demand that licence fee for the fourth quarter should be on actuals and should be equal to the licence fee of the last quarter. Sinha was also informed that the industry’s debt levels have risen sharply from ₹2.7 lakh crore in 2014 to ₹4.85 lakh crore at the end of December 31.
PK Pujari, secretary, ministry of power, who also holds additional charge for the department of telecom (DoT), did not respond to phone calls and a text message seeking a response.
Rajan Mathews, director-general, Cellular Operators Association of India (COAI), confirmed that he had written to DoT seeking respite from submitting licence fees, among other issues.
“Nobody in their wildest dream had thought that revenue will come under pressure as we thought subscribers will keep rising, but now, because of the situation that we are in, nobody had anticipated that somebody will give away 100% services for free,” Mathews of COAI said.
An email sent to Reliance Jio on Thursday remained unanswered till press time.
Telecom operators have repeatedly complained against Jio’s free offers since its launch in September. Jio initially offered free voice calls and data until the year-end in a promotional offer, and later extended them to March 31.
Sinha’s meeting came days after cabinet secretary PK Sinha asked SBI Caps to apprise him of the situation in the telecom sector. According to a Moneycontrol.com report on April 5, the state-run investment bank highlighted the industry’s debt situation as a major worry.
Such activity in the government, the people mentioned earlier said, were largely triggered by Jio’s announcement on March 31 when it said it had a paid subscriber base of 72 million and that its services would remain free for three more months till end-June for certain subscribers.
Experts said Trai and DoT may be seeing merit in arguments that the industry incumbents are hurting as a result of these offers.
“The regulator’s decision likely reflects a more holistic view of the health of the players, which would be critical for rollout 4G services and fulfil the Digital India agenda of the government,” Deutsche Bank Markets Research said in a note on April 7.
JPMorgan Asia Pacific Research said that it expects ₹1,500 crore annualised shortfall in the government’s revenue because of a tariff war that has disrupted the industry.