Home / Industry / Telecom /  Telco consumers will be at a disadvantage in duopoly: Sajjan Jindal

Mumbai: JSW Group chairman Sajjan Jindal called out the disadvantage to telecom consumers if Vodafone Idea were to shut shop, asking the government to intervene in a Twitter post today.

The Indian telecom sector went through a major upheaval following the launch of Reliance Jio’s free services in 2016 leaving only two other private operators in the ecosystem. This situation was further exacerbated by the Supreme Court verdict on long pending adjusted gross revenue (AGR) dues in October 2019.

“In telecom, consumers will be at a disadvantage with only two players left in the game if Vodafone Idea were to close down," said Jindal in a message addressed to the PMO and Finance Minister.

Vodafone Idea reported a loss of 25460 crore for the first quarter ended June 30 compared to a loss of 11643 crore in Q4. Losses were far higher than estimates as the company recognised a provision of 19440 crore towards license and spectrum charges under adjusted gross revenue (AGR) payments. Telecom peer Bharti Airtel also posted a net loss of 15,933 crore in Q1 due to a massive 11,746 crore provision primarily towards AGR liabilities.

However, Bharti Airtel’s ability to survive despite these losses is not as big a concern as Vodafone Idea’s. “ Our ability to continue as a going concern is essentially dependent on a positive outcome with regard to the timeframe for the payment of adjusted gross revenue dues to be made in instalments and successful negotiations with lenders," said the management post Q1 earnings.

Vodafone Idea needs to pay around 50,400 crore more to the telecom department in license fee, spectrum usage charges (SUC), interest and penalties. The top court has reserved its order on whether telcos will be allowed to stagger their payment over a timeframe.

“Government must in some way facilitate the survival of Vodafone Idea as a third competitor," Jindal added.

The Cellular Operators Association of India (COAI), in a letter to finance minister Nirmala Sitharamanin June, had also sought relief for telecom operators including Airtel, Vodafone Idea Ltd and Mukesh Ambani’s Reliance Jio Infocomm Ltd, urging that the effective rate of spectrum charges should be reduced by 3% for all service providers and license fee contribution should be lowered to 3% from 8% with immediate effect.

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