Issues Involved: One of the major issues faced by this sector is declining profitability which is further exacerbating the twin balance sheet (TBS) problem. Profitability is being affected by following issues:
- Low revenues – Dramatic reduction of prices & coming down of average revenue per user by 22% due to new entrant.
- High Debt – Unsustainable spectrum prices and low revenue is also leading to high debt. According to industry sources, telecom companies together carry a debt of approximately Rs 5 lakh crore.
- High levies – Government levy on the sector is in the 30 per cent-plus range of international standard. Other South Asian countries such as Pakistan, Bangladesh and Sri Lanka levy in the range of 20s.
- Expensive spectrum – The price of spectrum in India is among the highest in the world but telecom firms have to buy it to remain relevant and competitive in the business
- Competition from over-the-top operators such as WhatsApp as they don’t have to pay taxes or levies to the government.
- Restrictive government policies – for example cross-holding norms prevent a telecom company from owning separate stakes in other operators during mergers and acquisition such as RJio or Airtel cannot acquire a stake in Tata Teleservices or Aircel; they can only buy-out 100 per cent of the company so as to create a merged entity.
- Quality of telecom services – is disappointing due to issues like call drop etc.
- Differential pricing for data services – Although TRAI promotes net neutrality, there are no laws enforcing it.
Recent reduction in Interconnected Usages Charges (IUC) by TRAI has been described by various operators as a huge loss of revenue.Final Destination for Haryana PSC Notes and Tests, Exclusive coverage of HPSC Prelims and Mains Syllabus, Dedicated Staff and guidence for HPSC Exams HPSC Notes brings Prelims and Mains programs for HPSC Prelims and HPSC Mains Exam preparation. Various Programs initiated by HPSC Notes are as follows:-
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