Interim Budget 2019: No major sops but heaps of praise from FM for telecom

Reliance Jio's disruption of the sector, and its subsequent consolidation, telecom has been looking for relief from govt as players battle low tariffs and slipping subscriber base

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Last Updated : Feb 01 2019 | 3:08 PM IST

Although Interim Budget 2019 did not offer any particular relief to the struggling telecom sector, the finance minister pointed out the growth achieved by telecom subscribers in making India the world leader in data consumption.

“India is now leading the world in the consumption of mobile data. Monthly consumption of mobile data increased by over 50 times in the last five years, “said Piyush Goyal, minister of Finance. Adding that the The cost of data and voice calls in India is now possibly the lowest in the world.

The telecom sector in India has undergone major transformation since September 2016 when Mukesh Ambani launched Reliance Jio, which has since led to the sector consolidating into a three large player market. This comes as the telecom sector has been looking forward to some relief from the government as they battle extremely low tariffs and slipping subscriber base.

According to estimates Reliance Jio is likely to capture a 51 per cent revenue market share (RMS) in the next three years, but analysts, also feel that with incumbent telcos seeking to raise prices, it is up to Jio now to take the lead in hiking tariffs.

Goyal further added that more than 300,000 Common Service Centres (CSCs) employing about 1.2 million people, are digitally delivering several services to the citizens. “The Common Service Centres are expanding their services and also creating digital infrastructure in the villages, including connectivity, to convert the villages into Digital Villages. The Government will make 100,000 villages digital over next five years,” he said.

The rapid growth of access to wireless services by telecom players out of sheer competition has meant that it sped up the reach of essential communication services in the country. Now the telecom players are in a rush to increase their rural coverage which will only aid the Digital India mission.

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Despite 70 per cent spike in outgoing voice calls, telecos have witnessed revenue from calls reducing to a third of what it was two years back. Only the data revenue has doubled. The tariff pressure on the telecom industry has been driving the telcos to adopt a heavy investment and low revenue strategy to woo customers.

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While Jio’s USP has always been around increased data usage and cheaper data prices, this period has also witnessed a spiralling growth in voice calls as exhibited by TRAI performance indicator data over the past year. While analysts agree that a large part of this comes from free calls on the Jio network, it doesn’t take away from the fact that cheaper telecom plans have drastically increased voice usage. Incumbent player Bharti Airtel reported a loss of 48 million subscribers over the past quarter to scrape in a 4 per cent rise in Average revenue per user (ARPU) in the Q3 result reported on Thursday.