Hammered by retrospective tax determinations and non-traditional pricing plans introduced by Reliance Jio, the Indian telecom sector appeared to be in some kind of death spiral. But T.K. Thomas, one of the most knowledgeable observers of the sector, sees hope in the recent infusions of funds by entities ranging from Facebook to the Government of India. Beyond the immediate cash inflows he sees the overall prospects as positive:
More than 50 per cent of the market is still not connected by data services. Those who do have access to Internet services, are consuming data like never before.
Although the current data pricing is still low, tariffs will only go up from here on. The telecom regulator is discussing the possibility of introducing a floor price. The financial stress on the telecom companies will ensure there’s no tariff wars. Higher tariffs mean better revenue for the operators.
The recent lockdown due to the coronavirus has brought Internet access under the spotlight. Millions have been able to buy essential commodities, do financial transactions, watch movies and catch up on news; and work from the comforts of home only because of reliable telecom networks. Even after the lockdown gets lifted, many companies and individuals would prefer to work from home.
Telecom networks are clearly at the heart of our digital future. While most sectors are grappling with a huge decline in business, telecom is slated to grow by 15-20 per cent amid the economic slowdown. This is great news for telecom operators, who have been fighting for survival amid declining revenues, mounting losses, and climbing debts.