Telecom sector brutally challenging, more disruptions to come, says Sundararajan

Telecom sector brutally challenging, more disruptions to come, says Sundararajan
Telecom sector brutally challenging, more disruptions to come, says Sundararajan

The Indian telecom ma?rket is “brutally ch?a??llenging” and has on?ly seen the beginning of ma?ny disruptions to come, telec?om secretary Aruna Sund?a?r?arajan said on Thursday. Th?is however, offers ample gr?owth potential to not only dr?aw massive investments but also ensure profitability, she added.

“While the Indian telec?om market is vibrant and exc?iting, it is also brutally chall?enging. I think we have only seen the beginning of disr?u?p?tion and I am sure there wi?ll be many more disruptions to come but this is a market which is big enough, has en?o?ugh growth potential for us to attract those kinds of inve?s?tments and yet make inve?s?t?ments profitable,” she said at a panel discussion on ‘digit?al infrastructure for transforming India' organised by broadband India forum.

Over the past few years, In?dia’s telecom market had become cut-throat where ne???arly a dozen players jostl?ed for market share, pumm?e?lling call rates to amongst the lowest in the world. Co?m?petition has only intensifi?ed since 2016, when Reli?a?n?ce Jio Infocomm, owned by Mukesh Am?bani, stormed into the ma?rket and offered free calls and dirt cheap data. This triggered consolidation in the industry.

Recently, finance minist?er Arun Jaitley also exp?r?e?s?s?ed concern over intense co?m?petition in certain sectors killing the ecosystem.

The results of the tariff war on the financial health of the sector are evident. Vo?d?afone Idea chief Kumaram?anagalm Birla is seeking a 2-year extension — from 16 to 18 years ?— for payment of spectrum dues. Earlier this month, at its maiden earni?n?gs announcement as a joint entity, the firm reported a consolidated loss of Rs 4,973 crore for the Sept. qu?a?rter and announced a fund in?fusion of Rs 25,000 crore to help it take on competition.

Bharti Airtel too has repo?r?t?ed a drop in consolidated net profit for the 10th str?ai?g?ht quarter as losses on mains?tay business widened due to pricing pressure from aggr?e?s??????sive competition. Ov?e?r?a?ll, its consolidated net pr?o?f?it of Rs 118.8 crore in July-Sept. re?presented a dr?op of ab?out 65 per cent from Rs 343 cr?o?re in the year ago per?i?od.

Airtel’s loss from India op???erations (before exceptional items) mounted to Rs 1,646.4 crore in the second quarter of the current fiscal compared to about Rs 940 crore in the preceding three-mo?nth period. In fact, Moo?dy’s investors service recently placed Bharti Airtel’s rati?ng on review for downgrade, following low levels of profi?t?a?bility and expectation of weak cash flow.

Sundararajan said that $100 billion sectoral investment enshrined in the national digital communications policy is not an overestimate and may well turn out to be less-than-adequate in the wake of new age technologies and advent of 5G.