Amidst the financial crisis which is looming over the telecom sector, a top government official has rubbished all pessimistic predictions stating that the medium and long-term prospects for the sector are positive. Apparently, it is because of the rising demand for data.
The Telecom Industry which reportedly is reeling under the debt to the tune of 5 lac crores and has approached the government for financial relief, is also undergoing consolidation. This consolidation is partly blamed on the rising cost of maintaining the business in the country and the falling revenue (especially the loss of revenue from streams like messaging and others due to the emergence of internet-based technologies like ‘instant messaging’ etc).
The government has provided relief to the industry in the form of increasing the tenure for the payment of airwaves and also lowered the interest to be paid on making those dues, is in the long-term focused on providing a level playing field for all players, as stated by Aruna Sundarajan, Telecom Secretary, at India Economic Summit 2017.
Dispelling any statements with regards to the reduction in jobs in the industry because of consolidation and financial stress, the official said, “There is consolidation. People are trying to merge. People are saying there is financial strife, but no one is saying there is huge joblessness in the sector.”
She also stated, highlighting the vision of the government, “India is the fastest digitizing nation and hungry for digitization. But there is a lot to be done in terms of building information highways and superhighways.”
But is this enough for an industry which is not seeing the consolidation of the bigger players like Idea and Vodafone, but also the ongoing process of the shutdown of Tata Teleservices. People Matters has already talked about the indicative factors which suggest a decline in the Telecom industry: entry of Reliance Jio, increasing financial debt, and the ongoing mergers and acquisitions. Even though the Telecom Secretary, talked about how the government has no times to waste, we have over the past decade not seen much of a progress or development, in the sense of creating a long-term foundation for both the telecom industry and the economy.
Here is what the government needs to be doing:
- Fast-track the laying down of foundation: The news report had talked about the BharatNet initiative that has led to connecting over 750,000 gram panchayats and the goal of 100,000 by the end of the year. But more needs to be done.
- Come out of policy paralysis: The previous government's regime was marked by corruption cases in the telecom sector. Fortunately, this one isn't but the government needs to actively counter policy paralysis in this sector.
- Encourage entrepreneurship by lowering entry costs for small players: Telecom sector is among the hardest to get in sectors in the country because of the initial capital expenditure required by any firm. The government should think of an innovative way to bring down this barrier, even if the cost of licensing of the airwaves cannot be completely brought down. This will also lead to the creation of the job.
- Be visionary: The government had been unable to predict the evolution of technology in this sector and also the competitive sectors which have had led to the current situation the industry is in. It should as of now start investing in not just catching up to future technologies which are constantly.
- Focus on avenues of job creation: The current consolidation in the industry is because of the extreme financial stress that Telecom is facing. It cannot be assumed that the financial stress will not impact the employees. Hence, the government must start thinking of how should they enable the transfer of jobs, either forward and towards a more stable and transformed industry, or in avenues which are similar to Telecom, for example, the Media and Entertainment industry in India.