What is the issue?
Telecom sector in India is currently going through its roughest patch since mobile connectivity began.
What are the developments in the industry?
- Operators have bid for nearly 5-lakh crores to buy spectrum.
- This is in addition to the annual levies accounting for almost 30% of their revenues – causing great financial stress & debt.
- The entry of Reliance Jio, which has disrupted the market with low-cost data services, increased the industry’s woes.
- Consequently, a number of operators like Reliance Communications and Tata Teleservices have been forced to exit.
- The crisis has also severely impacted investors, lenders, partners and vendors of these telecom companies.
- While the impact on subscribers has been limited thanks to mobile number portability, it has been hard on employees.
How has it impacted Jobs?
- In the last year alone over 10,000 jobs have been lost due to cost cutting measures by the telcos.
- The situation is expected to worsen in the next 6 to 12 months as more tele-operators are facing an uncertain future.
- For those losing jobs, the hiring scenario in other employment-heavy sectors like IT and e-commerce is currently bleak.
- While those in marketing or sales can move to sectors such as FMCG, those on the technical side could be left in the lurch.
- Ironically, all this is happening at a time when the Indian telecom sector is at the cusp of a major data revolution.
Will it impact the envisioned Data Revolution?
- As only 40% of the country’s population has internet access, there is a huge demand for telecom services going forward.
- Telecom operators will have to invest heavily in rolling out 4G networks for which capital and human resources will be required.
- But this can become a reality only if some immediate steps are taken both by the industry and the Centre.
What is the way ahead?
- Forced expensive bidding have puts operators in a financial mess, which calls for rationalising spectrum pricing.
- Also, as big investments are needed in the sector, the annual levies need to be brought down drastically.
- Exits and mergers need to get easier so that strong players are able to absorb weaker ones without losing asserts.
- Operators too should start creating new revenue stream as the days of offering plain voice telephony services are over.
- The demand for data services is set to expand rapidly in the coming years which providers an opportunity to revive the sector.
Source: Business Line
