The telecommunications industry in India.

 

The telecommunications industry in India faces an Oligopolistic market structure with a combined revenue potential of 30 billion Us dollars and a taxation rate of 33 % with four prominent players of equal sizes, namely, BSNL and, Vodafone Idea Bharti Airtel, Reliance Jio. The industry has grown at a stagnant rate from 3% to 4%; however, it has been the most significant contributor to GDP at 11% and contributes 11,00,000 jobs yearly in India. However, key challenges remain industrial prices set by Jio as rock bottom, heavy taxation and cumbersome merger acquisition regulations and intense consumer pressure on low prices.

Industrial output has grown from 22billion dollars to 30 billion per GSMArena, TRAI data, and DoT data. FDI in Telecommunications has increased, however humongous by 57%but the consumer demand for data and calls has grown enormously by 322%. The prices fell to 5 Rupees per 1 GB of data compared to 250 rupees for 1 GB of data in 2014. The Government has too allowed foreign investment and global players to bid for spectrum auctions; hence, net FDI is higher, and dollar inflow and surplus to are high.

The biggest drivers of the growth pattern are changing consumer preferences to higher usage plans, lower prices which drive higher affordability, 4G coverage and infrastructure sharing. The Demonetization in 2016 in India saw considerable losses in the telecoms sector. Similarly, the 2008 Recession also impacted the financial health of 10 players erstwhile, which led to substandard growth in the Telecommunications sector in the 2009 era.

AFTERMATH

The whole unemployment levels have cascading effects on the economy as real wages dropped by 8.5 per cent due to low demand, higher layoffs, and frozen hiring, which causes aggregate demand and overall consumption to fall. Hence, India's GDP Plunged to 5 per cent, the weakest in the last 15 years. The interest rates too rose as banks faced a liquidity crunch, which led to massive deficits in corporate expenditure, leading to lower salaries and, hence, lower productivity and Inflation at CPI bottomed out at 3.7 per cent.

RECOMMENDATIONS

Recommendations for expansion, including a heavy bid for spectrum auctions, cutting down 3G towers, and adopting mass bundled plans across rural areas for widened coverage and tie-ups with smartphone vendors, become the need of the hour.

CONCLUSIONS

We infer that rising taxes, increasing compliance, and competitive pressures from incumbents coupled with low dirt prices will keep industry revenues subdued for a while and will only improve after four quarters, as Crisil ICRA. With the advent of 5G, we hope the future to cross 100 billion dollar opportunities in India with tonnes of commercial use cases and tectonic changes in Technology. 5G will see unprecedented growth as the industry stabilizes and consolidates itself, leading to firm prices, saturated demand, and wide-scale adoption of 4G and 5G services.