Low ARPU levels, high debt pain points for operators

  • by


One would agree that during the pandemic, telecom emerged as a lifeline for households, businesses and governments across the globe. In India, the second-largest telecom market in the world, digital technologies took over traditional jobs, delivering uninterrupted services to the public. Spearheaded by key initiatives such as Digital India and Atmanirbhar Bharat from the Narendra Modi government, digital penetration reached a whole new level during 2020.

With telecom acting as the central spine for digital innovation, the TSPs played a crucial role in enabling transformation during the pandemic. In the initial months, when the nation imposed complete lockdown, the telecom industry was also hit, with a sharp fall in subscribers. However, businesses and customers adopted new ways of living after the complete lockdown. Businesses opted for remote working, banks digitalised their means to help customers, traditional education took to online mode and outdoor shopping gave way to home delivery services.

Rise in voice, data consumption

There has been tremendous growth in voice and data consumption in the last few years. The wireless voice consumption has increased substantially since 2016, from the point the voice calls were started to be provided for free. The wireless Minutes of Usage per subs per month increased from 360 minutes in December 2016 to around 744 minutes in June 2020. The competition-driven low data tariffs have resulted in enormous usage of mobile data and have made India the highest consumer of mobile data in the world. The wireless data usage per subs per month reached 12.15 GB in June 2020 from 0.08 GB in December 2014. However, the voice and data realisation has fallen significantly in the last few years, by around 75 per cent and 95 per cent respectively, resulting in decline in the ARPU levels of the industry.

According to TRAI, the wireless ARPU for the quarter ended June 2020 was ₹90. The sector is already reeling under a daunting debt (liability of of ₹8.55 lakh crore). Low ARPU levels and high debt /liability have had severe impact on the profitability of most of the TSPs who are making negative returns on their investments.

Road ahead

It is imperative to look deeper into how the industry will cope with current challenges. The AGR crisis has impacted the finances of the TSPs and its consequences will be evident in the coming 10 years, till they clear the dues to DoT. As India awaits the next big wave of telecom transformation with 5G, operators are under pressure yet again. To meet the ultra-fast, no-latency SLA requirements in 5G and support the new trends like EDGE computing, operators need to invest massively in spectrum, last mile connectivity and backhaul. Conversely, the telecom industry is still ranked as the one with the cheapest telecom tariff. This apart, the industry is aggrieved with several challenges associated with spectrum allocation, Right of Way (RoW) policies, mobile tower radiations, and others.

As India awaits the next wave of digital revolution with 5G, all eyes are on operators; and so, in the upcoming year new challenges and obstacles will come into existence. The government has issued several schemes to support the industry and also to encourage indigenous manufacturing. COAI member operators have responded well to Prime Minister’s clarion call on Atmanirbhar Bharat. The homegrown 5G solution from Reliance Jio is a significant achievement in this line. Bharti Airtel and Vodafone Idea have invested in technologies like SRAN and MIMO (Multiple Input Multiple Output) to make their network 5G ready. Also, global leaders like Google, Apple, Samsung, Facebook, Nokia, and Ericsson among others have joined hands with Indian firms to boost their manufacturing base in India.

While 5G developments are on the way, India will also witness massive developments around 4G, enabling wider adoption of broadband services across the entire spectrum of citizens. However, as the network gets congested, the service quality will get affected. Going forward, the telecom industry needs support from the government to address these concerns.

(The writer is Director-General, Cellular Operators Association of India)



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *