Jio effect: Vodafone makes emergency call to govt for reduction in official levies
Telecom major Vodafone has sent an SoS to the government saying the established telcos have been forced into a situation where it has become commercially unviable to provide services
- Aug 16, 2017,
- Updated Aug 16, 2017 8:10 AM IST
Telecom major Vodafone has sent an SoS to the government saying the established telcos have been forced into a situation where it has become commercially unviable to provide services and it is now essential to reduce official levies on the sector. Vodafone has in a letter to the Department of Telecom cited the mounting losses of telcos as clear evidence that the sector has plunged into a crisis.
The letter also states that under-pricing by Reliance Jio will further dent the revenues of the established players. The industry is in deep stress now and even at current levels it is unviable to service the cost, the letter adds. "We respectfully submit that the industry is forced to operate without any financial returns,'' Vodafone has stated in the letter.
"The new operator continues to aggressively under- price its services, including announcing launch of 'Effective Zero Price Feature Phone' with unlimited voice. This is likely to cause further erosion in revenue for existing operators," the Vodafone letter states. Mukesh Ambani-led Reliance Jio recently launched JioPhone, a 4G feature phone at a onetime fully refundable deposit of Rs 1,500 per unit.
The booking will start from September 24 online as well as through Reliance Retail and Jio stores. Citing its financial performance, Vodafone said there has been a continuous decline in its revenue from telecom services and it has recorded a further drop of 3.41 per cent during the quarter ended June 2017.
Confirming the letter, a senior official told Mail Today that the government has already formed an inter-ministerial group (IMG) which is looking into various issues confronting the telecom sector and will submit its report soon. Vodafone has also urged the government to reduce the interest rate applied for deferred spectrum payments to reduce burden on operators. "Hence, we have requested reduction from 10 per cent to G Sec rate of 6.25 per cent - 6.5 per cent on deferred payment," the letter said.
Vodafone said that revenue share with the government imposes huge burden on telecom operators even though companies purchase spectrum at the market price. The telecom major has also sought a rescheduling the spectrum payment period to ease the financial burden on telcos.
The company requested DoT to consider recommendation of the Telecom Regulatory Authority of India for reducing Universal Service Obligation Fund from 5 per cent to 3 per cent as private operators have already rolled out services in rural areas and current call termination rates are very low.
Telecom major Vodafone has sent an SoS to the government saying the established telcos have been forced into a situation where it has become commercially unviable to provide services and it is now essential to reduce official levies on the sector. Vodafone has in a letter to the Department of Telecom cited the mounting losses of telcos as clear evidence that the sector has plunged into a crisis.
The letter also states that under-pricing by Reliance Jio will further dent the revenues of the established players. The industry is in deep stress now and even at current levels it is unviable to service the cost, the letter adds. "We respectfully submit that the industry is forced to operate without any financial returns,'' Vodafone has stated in the letter.
"The new operator continues to aggressively under- price its services, including announcing launch of 'Effective Zero Price Feature Phone' with unlimited voice. This is likely to cause further erosion in revenue for existing operators," the Vodafone letter states. Mukesh Ambani-led Reliance Jio recently launched JioPhone, a 4G feature phone at a onetime fully refundable deposit of Rs 1,500 per unit.
The booking will start from September 24 online as well as through Reliance Retail and Jio stores. Citing its financial performance, Vodafone said there has been a continuous decline in its revenue from telecom services and it has recorded a further drop of 3.41 per cent during the quarter ended June 2017.
Confirming the letter, a senior official told Mail Today that the government has already formed an inter-ministerial group (IMG) which is looking into various issues confronting the telecom sector and will submit its report soon. Vodafone has also urged the government to reduce the interest rate applied for deferred spectrum payments to reduce burden on operators. "Hence, we have requested reduction from 10 per cent to G Sec rate of 6.25 per cent - 6.5 per cent on deferred payment," the letter said.
Vodafone said that revenue share with the government imposes huge burden on telecom operators even though companies purchase spectrum at the market price. The telecom major has also sought a rescheduling the spectrum payment period to ease the financial burden on telcos.
The company requested DoT to consider recommendation of the Telecom Regulatory Authority of India for reducing Universal Service Obligation Fund from 5 per cent to 3 per cent as private operators have already rolled out services in rural areas and current call termination rates are very low.