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Telecom Sector faces loss
Why in the news ?
- The telecom sector is likely to experience three more quarters of losses, hurt by high levies and "unsustainable tariffs", director general of industry body Cellular Operators Association of India (COAI) has said.
More in the news
- The statement from the Association said the present tariffs are sustainable for long-term health of the industry.
- Another issues that have added to the operators’ woes are :-High incidence of levies.-Licence fee and spectrum usage charges-Upfront payment for radio waves.
- Industry has already suffered losses from last two quarters, and expected to face another loss.
Tariff war
- In 2016, Reliance Industries launched Jio, a new fourth-generation wireless service that disrupted the telecom industry by offering free calls and cheap data on mobile phones.
- Jio’s entry set off a tariff war, forcing Airtel, Vodafone and Idea (now Vodafone Idea Ltd.) to cut tariffs.
- This had dented the industry’s financial metrics and deepened the impact of regulatory decisions like cut in termination charges.
Telecom sector in India
- India is currently the world’s second-largest telecommunications market with a subscriber base of 1.17 billion.
- The Indian mobile economy contribute substantially to India’s Gross Domestic Product (GDP).
- With 493.96 million internet subscribers, as of March 2018, India stands second in terms of total internet users.
- Rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India over the next five years, creating opportunities for new businesses.
Source
The Hindu, IBEF.