They may be in the midst of a competitive war of pricing, but both Vodafone Idea and Airtel seem to be on the same page about the government’s role and intervention in the telecom industry. Speaking at ET Telecom 5G Congress 2018 last Wednesday, the chiefs of both organizations wanted better support from the government to improve the industry’s health and also indicated a roadmap for 5G services being rolled out in the future.
Improve industry’s financial health:
It is well known that the telecom industry is witnessing tremendous competition from all quarters. This is even prominent ever since the introduction of Reliance Jio’s services in India. Post the Mukesh Ambani owned company’s rollout in the country, all major telecom company have had to play catch up and slash their tariffs in order to keep pace with Reliance Jio.
This has seen a bloody price war and eventually, these discounted prices have caught up with both Airtel and Vodafone, both of whom have largely taken hits to their respective financials in the last few quarters. With the Average Revenues per User (ARPU) going down quarter after quarter, newly appointed Vodafone Idea’s CEO, Balesh Sharma, said that the government must intervene to improve the health of the industry. He commented that “The government should restore the financial health of the sector”.
Balesh Sharma has only recently taken over as the Chief Executive Officer of the newly formed Vodafone Idea, which has officially commenced its operations this month after a long protracted merger saga. He was insistent that there must be some sort of intervention to ensure that debt-ridden telecom companies aren’t levied excessive amount of levies and other charges.
The industry is currently facing massive amounts of outstanding debts to the tune of a whopping 7 lakh crores. He sought some help from the Department of Telecommunications (DoT) to intervene and reduce levies, which would, in turn, enable the telecom companies to reduce their expenses and thus come out the massive amount of debt accumulated.
Set aside differences:
At the event, Airtel’s CEO Gopal Vittal was also present and he suggested that the regulators and players in the industry must set aside differences and work together to revive the health of the industry.
He commented, “It is time for the government, the regulator and all stakeholders to look at bold leadership, set aside differences and work together”. He went on to add that “a visionary public-private partnership between the industry and the government and creation of an innovation ecosystem across the industry” are two crucial components to make 5G technology adoption easy and accessible for the masses”.
Furthermore, he also suggested that tariff-slashing should be stopped and infrastructure must be shared by all players in the industry in order to ensure that everyone survives.
When talking about the upcoming 5G spectrum allocation, both the heads echoed a similar opinion as they felt that the government must relook at the prices set for the 5G spectrum auction. Gopal Vittal added that the return on capital in the industry is lower than 1%, while the price is significantly high.
On the other hand, he compared the pricing to that of the pricing in South Korea and Spain, as the auction bands are almost ten times as high, whereas the infrastructure in these countries is significantly better.
He added “We need at least 100 MHz of contiguous blocks of spectrum per operator and the pricing needs to be relooked. The government should further empower 5G high-level forum and allocate E and V bands. The fifth-generation, or 5G technology, will fulfill India’s larger socio-economic aspirations and create new job opportunities.”