In a recent letter to Telecom Regulatory Authority of India (TRAI), Telecom Secretary J.S. Deepak has said that telecom companies’ eagerness to get ahead of their competitors will hurt the banking sector.
Ever since Mukesh Ambani commercially launched Jio in September 2016, telecom companies like Airtel, Vodafone, Idea, and others, have indulged in a game of oneupmanship to make the biggest impact and to hold on to their market share.
The Secretary concerns add more weight considering the fact that Telecom Industry, as a whole, lost over 20% due to Jio.
In his letter written on 23rd February, the Secretary spoke about the government’s license fee collections and how it has fallen over the last one year. He stated the fee has dropped Rs.3,975 crores in the quarter ending June to Rs.3,186 crores to the quarter ending December.
He wrote: “The main reason for the downward trend appears to be a tariff war in the industry triggered by free promotional offers.”
The letter also stated the possible impact on the future wherein he said: “This can have a serious impact on the financial health of the sector, affect its revenue growth, and in turn, its capability to meet its contractual commitments which include payments to the government of instalments for spectrum purchased in auction, and repayment of loans to financial institutions and banks.”
“The Telecom Commission also desired that in case TRAI has a different interpretation of the above-mentioned decisions/directions, there appears to be an urgent need to revisit and review its tariff orders/decisions/directions in the larger interest of government revenues as well as the telecom sector”, he said.
Mr.Deepak concluded his letter with the statement that revenue is likely to fall by another 10% during the March quarter, and that the bidding war between telecom giants isn’t going to end any time soon.