Vishal Pratap Singh
Recently, India’s federal cabinet approved an aid package for its cash strapped telecommunications sector, including a four year moratorium on radio wave payments owed to the government. The deferred payment cycle will begin in October. “We believe that there must be healthy competition in the sector and for that there will be more reforms when the 5G spectrum is auctioned, so that more and more players can enter this sector,” says Ashwini Vaishnaw, Telecom Minister.

The relief package focuses on telecommunications service providers such as Vodafone Idea and Bharti Airtel that are on the brink of going bankrupt and have to clear a huge amount as part of Adjusted Gross Revenue (AGR) dues. The importance of saving these companies has already been specified by various research firms such as credit rating agency Icra. Icra said in its statement that the survival of these telecom companies is important as its absence would effectively reduce the private telecom space to a duopoly, a development that could be ultimately harmful for consumers.

Create Employment Opportunity

This relief package provides relaxation to telecom companies and in long run it is expected to protect and generate employment opportunities, promote healthy competition, protect interests of consumers, infuse liquidity, encourage the investment from big players and reduce the regulatory burden on the Telecom Service Providers (TSPs). Also, the moratorium provided by government on issues related to Adjusted Gross Revenue will offer space to the cash strapped firm to improve its business and clear dues over a longer period.

Rationalised Spectrum Charges

This relief package will rationalise the spectrum charges that telecom firms have to bear. The monthly compounding of interest on the usage of spectrum charges will be replaced by annual compounding and the interest rate will be decreased. This has been a long standing demand of the telecom industry especially by Vodafone Idea and Bharti Airtel. Industry experts believe that telecom industry which is reeling under financial stress, might get a breather soon due to this relief package.
Increased Cash Inflow

The cabinet has announced 100 percent Foreign Direct Investment (FDI) in the telecom sector through the automatic route as part of its comprehensive package for the telecom sector. Uptil now, 49 percent FDI was allowed through the automatic route and the rest portion of FDI goes through the government routes. These new amendments are expected to ease the issues related to cash inflows that are being faced by most of the players in the industry.

As the sector gets back on its feet, there are several new technologies that will further boost the growth of the segment. According to a recent survey, it is found that India has successfully adopted 4G both in rural and urban areas. So, telecom operators are focused on finding some more innovative ways to adapt required changes and plan their network services for the users.

Internet of Things (IoT)

Internet of Things (IoT) devices and sensors influenced all industries in the recent time. It has improved the people’s quality of life, allowed interconnection between devices, sensors, infrastructure as well as computing elements which will further enable new ways for management. IoT has automated production processes and allowed the implementation of Industry 4.0 concepts in the telecom industry.

Focusing on 5G Connectivity

Since after the surge of COVID-19 pandemic, more people are shifting towards remote working which rapidly gave rise to demand of telecom services. All the telecom companies are focusing more towards 5G connectivity. Telecom companies are also collaborating with device manufacturers like Samsung to bring in 5G compatible devices. Many companies have also started their 5G trials and trying hard to increase their peak speed. Recently, Vodafone Idea claimed that they achieved peak speed of 3.7 Gbps on mmWave band.

Increasing Fiber Connectivity

In order to achieve high speed connectivity, telecom companies are focusing on upgrading entire fiber network across the country. With the government mandate to fiberize every village and town of the country, industry experts are expecting massive development in this space. India’s current penetration into fiber connectivity is less than 30 percent of mobile towers and 7 percent households.

While system integrators are consistently supporting telecom operators to make end-to-end automation successful, services like remote learning, e-commerce entertainment have become mainstream due to the pandemic. These emerging applications require more bandwidth and lower latency as these services cannot be provided by traditional centralised data centers to get the best user experience. So, telecom companies are trying to scale up the current infrastructure.

Expectations in Future

India is currently the second largest telecommunication market and has the second highest number of internet users in the world. The number of internet subscribers in the country is expected to double by 2022 to 830 million and overall IP traffic is expected to grow by four times at a CAGR of 30 percent by 2022. So, there are a lot of expectations from this relief package as in this era of hyper connectivity, everybody is looking for a robust digital neural network to function seamlessly. The government has fast tracked reforms in the telecom sector and continues to be proactive in providing room for growth to telecom companies.

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