Airtel And Idea Speak Of Poor Economic Health
Bharti Airtel and Idea Cellular last week claimed that the telecom sector is below a brutal financial pressure and requires support from the government to take up expansion and investment plans.
The MD and CEO of Idea Cellular, Himanshu Kapania, claimed that the latest slash in IUC (interconnection usage charges) by TRAI, the regulator, will drain the sector of investable capital, and asked for urgent interference by the telecom ministry via relief actions. “The declared IUC will additionally drain out the sector of its investable capital apart from making inter-operator unevenness of hefty traffic asymmetries. The fault-lines are by now evident with the sector undergoing pressure,” Kapania claimed to the media on the occasion of the India Mobile Congress.
He claimed that the revenue collection of the government from the telecom firms will be banged negatively. “This will also affect the long-term economic structure of the sector.”
Kapania claimed that the decision of IUC by the regulator will gradually erode 3G and 2G links in the sector, which will unfavorably affect connectivity in the rural area. “TRAI has forced us to a stage that only one technology endures and overall technologies will shut down,” he further added.
Terming the financial and regulatory issues being encountered by the industry as the “elephant in the room that no one is talking about”, Kapania was specifically forceful on the IUC slash amongst high levies and firm spectrum prices such as GST and license fee as huge restraints.
“No sector can endure the radical fall in data and voice tariffs that have dropped to ‘below price’ levels over the past 1 Year,” Kapania claimed. The CEO and MD of Bharti Airtel for South Asia and India, Gopal Vittal, also had the same opinions. “Taxation on the sector is very big. It is in the tune of 29% to 32%. Spectrum price is one of the biggest and tax being one of the lowest. All of this requires changing to realize the vision and dream of Digital India.”
Vittal claims that the money owing of the sector at almost Rs 4.5 Lakh Crore and return on funds at almost 1% and all of this is an issue to admit. While recognizing that the government is busy making the norms easy for carrying out business, Vittal claimed that the sector is encountering issues on different fronts. “We find the acquisitions and mergers policy as a challenge seeing the pace at which it occurs,” the CEO of Airtel added.