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Why Indian telecom sector is in trouble?

Introduction:-

Major and bold decision to shift to revenue sharing model from techno fee in 1999 gave a boost to the growth of the telecom sector. Soon, the user base crowd 300 million marks in 2007, however, this decision has now come to haunt these major telecom players today, so much so, it risks their survival.

History of telecom sector in India:-

  • The wired telephone sector in 1990 experienced and the average revenue per user (ARPU) was over Rs 1250 per month, this kept the growth of the sector dismal.
  • Switching to wireless technology and revenue sharing model led to a rapid boost in the growth.
  • New entrance during the 2000s brought per sec billing, which was followed by old players, further rushing the ARPU town.
  • Increasing the user base and teledensity was the sole motives of the companies.
  • In 2012, Reliance jio acquired the spectrum auctioned by the government and stated free voice service in 2016. This further decreased revenue and increased competition…
  • The Supreme Court’s direction to the telecom companies to pay revenue share and due penalties and interests amounting to 71.3 lakh core has worried the sector.

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Issues with the sector:-

  • Supreme Court’s directives ask the companies to pay revenue share on proceeds from the sale of handsets, tower sharing, infrastructure sharing, income from dividends etc.
  • This leads to revenue from new telecom scenario and puts heavy pressure on companies.
  • Excising loans of over Rs 7 lakh corer of the sector.
  • Over 30% of the customers will get to the government influence of revenue hare, auction spectrum, GST, corporate tax, etc.

Way ahead:-

  • The government should not sale the telecom sector as a more revenue-generating sector.
  • Realize the role of telecom sector in Digital India program me.
  • Having multiplayer to revenue there is no monopoly.
  • Reduction in revenue from the sector by the government.
  • Pleased instalments of the principal amount of revenue share to be taken and the late fees and interests to be subverted.

Only by realizing the role of the sector in the economy can the sector be saved. Little all the companies fighting for survival, the government in support do come in for this rescue.

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