Indian government provides some relief to battered telcos
The Indian government has announced changes to spectrum rules which will provide some financial relief and greater commercial opportunities to telcos feeling the strain of intense competition.
With Jio’s entry into the Indian market profit margins and customer loyalties have truly been put to the test over the last 12 months. Some might have believed Jio’s aggressive pricing was only a temporary measure but recent positive financial results suggest there might be a bit of longevity to the strategy after all. Just as the battle weary telcos were reaching for the aspirin, the Indian Government has stepped in to assist.
According to Reuters, the amount of time telcos have to pay the government for spectrum licenses has been increased, while the cap on how much spectrum can be accumulated in a particular band has been raised from 25% to 35%. The financial breathing room and the opportunity to go on the counter-attack might add a spring to the step of those fighting against the Jio onslaught.
Bharti Airtel, Idea and Vodafone have all been feeling the pressure on the spreadsheets, so the decision to extend spectrum payment to 16 instalments instead of 10 will be a welcomed one. Considering the consolidation and extinction we have seen in the Indian telco space over the last couple of months, changes to the spectrum rules were almost certainly needed to encourage participation at the next auction.
Aside from the merger between Idea and Vodafone, Jio’s aggressive moves have been the catalyst for Bharti Airtel to acquire the likes of Tata, as well as firms like Telenor exiting the space completely. Compared to what the ecosystem looked like a couple of years back, the telco world is looking a lot smaller in India. With less players and less money floating around, something certainly needed to be done to make sure there were bids during the spectrum auction.
