At a time when India's mobile telecom service providers complain about unfavourable government policies and charges, the industry is witnessing sharp erosion in the number of players. There will only be four players soon - Reliance Jio, Vodafone Idea, Bharti Airtel and BSNL/MTNL - as opposed to around a dozen in March 2016, according to a TRAI report.
The industry is going through tough times. More importantly, the telecom industry as a whole faces dues worth over Rs 1.3 lakh crore in licensee fees, spectrum usage charge, penalties and interest, after the Supreme Court recently backed the government's stance that non-core items should be included while calculating adjusted gross revenue (AGR). Bharti Airtel has to pay Rs 41,000 crore, while Vodafone Idea's dues amount to over Rs 39,000 crore.
The slide in the number of players started off with the Supreme Court cancelling 122 mobile licences in 2013. The disruption increased with the entry of Reliance Jio in 2016. The Mukesh Ambani controlled Reliance Jio has spent about Rs 3.5 lakh crore to build the data-based digital ecosystem. Today, Jio is the second largest player with over 350 million subscribers, just behind Vodafone Idea. The incumbents Airtel, Vodafone and Idea had fought multiple legal cases against Telecom Regulatory Authority of India (TRAI), for its alleged favoritism towards Jio.
The government has recently approved a revival package for BSNL and MTNL that includes merging the two loss-making firms, monetising their assets and giving VRS to employees so that the combined entity turns profitable in two years. The approved package includes infusion of Rs 20,140 crore capital for purchase of 4G spectrum, Rs 3,674 crore for GST to be paid on spectrum allocation, companies raising Rs 15,000 crore in debt on the sovereign guarantee and government funding Rs 17,160 crore voluntary retirement scheme (VRS) and another Rs 12,768 crore towards retirement liability.
But industry experts are not sure whether the revival package can actually revive the public sector firms.
Vodafone owns about 45 per cent in Vodafone Idea, while the Aditya Birla group holds 28.5 per cent. The share price of the joint entity has crashed 95 per cent to Rs 3 since January 2018, while its market capitalisation reduced to Rs 8,500 crore on November 14. In the September ended quarter, the company posted a humongous consolidated loss of Rs 50,922 crore, including AGR provisioning of Rs 25,678 crore and deferred taxes of over Rs 19,000 crore. In the last three previous consecutive quarters, the company had posted accumulated losses of around Rs 15,000 crore. The company has a net debt of over Rs 99,000 crore, while Bharti Airtel had a debt of Rs 1.16 lakh crore as of June 2019.
Sunil Mittal-led Airtel has reported highest-ever quarterly loss of Rs 23,045 crore in September quarter due to provisioning for AGR dues. The consolidated net loss before accounting the provision and exceptional items for the quarter stood at Rs 1,123 crore, while revenue rose by 6.9 per cent to Rs 21,131 crore.
The mobile telecom players which vanished from the industry over the last four years include Anil Ambani's Reliance Communications, Tata Teleservices, Aircel, Telenor, Sistema and Videocon. Reliance Communications, Aircel and Videocon had filed bankruptcy, while Tata Tele and Telenor were merged with Airtel.