Photo: iStock
Photo: iStock

Another call drop for India’s telecom sector

The Supreme Court has taken a dim view of the DoT’s plea of relief for telecom operators struggling to pay their dues. Sustained uncertainty could retard this market’s evolution

On Wednesday, Indian telecom companies found their voice of anguish abruptly cut off, it seems. In its observations on a plea of relief for them filed by the Department of Telecommunications (DoT), the Supreme Court said it saw no merit in letting them stagger their payments of dues to the exchequer over a period of 20 years, nor in waiving associated penalties and interest on unpaid sums—as reportedly sought by the government petition. DoT’s plea, it appears, was an outcome of consultations held by the government with industry representatives over the past few months. The court, however, chided the department for what it apparently saw as a bald attempt to redo the math with industry inputs, and was insistent that its order last October be implemented, the one that threw the sector into financial turmoil. Back then, the court had lumped telecom operators with a huge bill as part of a verdict on a long-running dispute they had with the Centre. They had argued that the revenues they compulsorily had to share with the government did not include what they got from services that did not use telecom spectrum, but lost the case. As a result, they were asked to cough up a total of nearly 1.7 trillion, according to reports. This was an eye-popper of a demand. It also dealt a heavy blow to large operators that had long been in operation, such as Vodafone Idea and Bharti Airtel, with the former’s very survival suddenly cast in doubt.

The muddle can partly be traced to the revenue-sharing model that was mooted by the A.B. Vajpayee government two decades ago, when telecom players found their businesses under stress and asked for a reprieve from the financial commitments they had made while bidding for licences and bundles of airwaves. Under a new policy, they switched over to a system that required them to share some of their intake with the government as annual licence fee and spectrum usage charges. What exactly they needed to pay, though, appears to have been defined a little too loosely. In 2003, it became a legal tussle between telecom operators and the DoT, and after the former started delivering various value-added services, the money under contention grew rapidly. Today, it should serve as a cautionary tale. Any policy should be framed with due care and kept stable. Sure, it need not be set in stone, but if a shift must be made, it should not be a clumsy piece of work that opens space for ambiguity.

Other factors also had a big role in the current financial troubles of companies gasping to pay their dues. A tariff war that erupted after Reliance Jio’s entry into the market in 2016 had squeezed margins in their quest to retain customers, even as they got laden with heavy loads of debt in a scramble for airwaves, itself the outcome of judiciary-ordained auctions of spectrum. All of it has led to the sorry pass we are at now. There is a question mark over future competition levels in this once-bustling market, and the exit of any large operator could go against the consumer’s interest. Moreover, there may not be enough players around with sufficient war chests to compete at a higher level of technology, as 5G offerings come along. Telecom has a long way ahead to evolve. It would be sad if something that began with a bang got reduced to a whimper.

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