New Delhi: In September 2021, the central government announced a relief package to help the cash-strapped telecom sector and approved several key measures, including a four-year moratorium on players’ dues to the government, that gave a lifeline to the sector. But the industry in 2023 believes its financial woes are far from over.
In an exclusive interview with ThePrint, S.P. Kochhar, Director General at Cellular Operators Association of India (COAI) — whose members include Bharti Airtel, Vodafone Idea and Reliance Jio — talks about reasons behind these woes, and highlights the need for more government assistance.
According to Kochhar, the Indian economy cannot prosper the way the Prime Minister Narendra Modi wants without the telecom industry being robust and healthy. For this, he said, the industry needs more government support, including reduction of taxes and levies. Edited excerpts:
Has the telecom package announced by the government not helped the sector given that some reports have indicated that India may become a two-player market? Do you see that as a possibility?
You have to see this in the context not only of the package announced but also what happened subsequently. There has been a huge amount of investment in 5G, which is rolling out without change in tariffs. That means there is an outflow, but hardly any change in inflow of collections. Therefore, to say that the sector’s financial health has improved would be an understatement.
Yes, the government has given us some relief that has improved the way of doing business, but there is still a long way to go.
The government also now realises that the telecom is an essential service. The economy cannot prosper the way the prime minister wants without telecom being robust and healthy and, therefore, in this 5G era, both the government and the industry have to join hands, and see that robust infrastructure is laid out for years to come. With this, all the other verticals and businesses can then prosper.
The foundation has to be strengthened not only by the industry, but also by help from the government because this is a national cause…. The government is also realising and hopefully things will get better. But as it stands, the average revenue per user (ARPUs) haven’t gone up. The reason is that 5G is still under roll out and the additions and ramping up will take time.
Also, 5G’s main source of revenue will be from enterprise business and that will take time. So, the industry is investing, hoping that things will be better in months and years to come. It is a calculated move by the industry to invest. It will be better for the nation if the government also looks at it from that point of view and gives the industry some relief.
To your other question, I would not like to comment on any individual company, but the fact is that the Indian ecosystem requires at least three players and there are no indications as of now saying that we will revert to a two-player system. So, we think that three players will continue.
But Vodafone is losing market share to the other two players. Do you think this will hamper the market competition?
I don’t think so. Whenever there is a change, there is a lot of churn. Sometimes it goes North, sometimes South…that is what we are seeing now. So, this churn is primarily because whoever rolls out 5G faster will see more migration because of novelty than anything else. There are other causes too, but I don’t think this is much to be worried about…stability will come after a few months. Then we will actually come to know who retains what figures.
Post the package announcement, has there been some positive impact?
Broadly speaking, ARPUs haven’t gone up the way they should to make the industry healthy. So, to reach that stage the government has to chip in.
First, one has to build a foundation and then put a building on top of that. We are right now at the foundation-building stage. The other businesses will then ride on telecom infrastructure. It is in the interest of everyone concerned to see that this infrastructure is robust.
Rather than looking at a small extra revenue, which might come out of infrastructure, it is better to look at the larger picture and see that the industries prospering via telecom will give them (government) much more revenue than telecom by itself. That is the change that will happen in 5G and that is something that needs to be capitalised upon.
Also Read: Why 5G phones are still priced too high for most Indians — ‘Democratisation yet to happen’
‘We have already started work on 6G.’
Has the 5G rollout picked up pace?
5G rollout and the pick-up in India have been the fastest in the world. It is going strong as per expectations. Obviously, everybody wants it to be done tomorrow, but things take time. Everyone is working to ensure a very fast rollout in the country. Till the time we reach a stage where the entire country is saturated with 5G, there will be teething problems, which happen whenever there is change in technology. So that is something we have to live with.
Do you think we started the roll out too soon?
There are two schools of thought. Some people say we are late, some say otherwise. You have to start somewhere. What is the right moment? Every moment can be right or wrong. I think it is the right time to start 5G.
The decision of not being the front runners in 5G has not proven to be wrong because we have learned from others mistakes. And that is why our rollout is very fast and so is the adoption. But the same thing should not be copied in 6G because it is the same technology… enhanced version. It is time for India to be on the forefront in 6G and that is what the government is doing. We have already started work on 6G.
What support are you seeking from the government now?
One is support for financial health. The problem is that up to the 4G era, the telecom sector was seen as a goose laying golden eggs. Whatever revenues could be extracted out of telecom, were being done.
Telecom infrastructure is no longer in the same category, it is a national building block. The government and the regulators also recognise that the infrastructure rollout has to be helped financially in ease of doing business and they are working towards that.
The pace at which we want that to happen is much faster because the capex requirements are immediate and cannot wait for the reforms to come in. Although they are coming in at a fast pace.
There are still levies and taxes and cost of spectrum, which need to be looked at again by the government, though it has given us some relief in the spectrum pricing and ease of doing business. The bureaucratic tangles have been removed, most of the policy letters that come out now are very clear and unambiguous…but we require more financial support from the government.
Taxes and levies should be reduced, we are insisting that the spectrum prices should be further reduced and that we get a contiguous spectrum. We should do long-term planning rather than short one. Indication is that the government is also thinking on the same lines, but practically it has yet to fructify.
Also, we need to see the country’s geography as our own and not as a cut and paste geography from the US or any other country. Their population density and requirements and their spectrum loadings are very different.
We must understand that we are not decrying that the government is not doing anything. They are doing a lot, but there is lots more to be done.
Do you anticipate major changes in cyber security and manpower re-skilling with 5G?
Up to 4G, we had limited parameters. We had an envelope of technical parameters within which we could work, and businesses had to work within them.
With 5G, that limitation has been removed.
Businesses can make whatever plans they want assuming that they will get that telecom service. Therefore, the versatility of the networks has to be increased immensely. It will require a lot of investment, not only in terms of money, but also different types of trained manpower.
Security, too, will change as with millions of subscribers, including sensors, coming onto the network, the risks will increase.
On top of that, the pipe of 5G is going to increase and decrease according to the requirements of the user. This means that the security has to increase or decrease with the same frequency and at the same rate else how will it protect the network?
So, it will not just be cyber security, but information and network security that has to be inbuilt. It has to be organic and cannot be an overlay.
Cybersecurity is going to take a quantum jump and different types of cyber security will come if we want to protect the network the way we see it. On top of that, complications will increase with the use of artificial intelligence.
What will happen is that manpower requirements at the lower end of the spectrum, which means physical, repetitive work will get curtailed. The requirements will now be more at cognitive level. That sort of requirement will certainly increase and it would be a manpower of different kind.
Earlier, the majority of the manpower was blue collar workers, and some were white collar. Now, a new breed of manpower is going to come in, which we may call a “no-collar worker”. They will have to do multitasking… work of both blue and white collar workers.
(Edited by Richa Mishra)
Also Read: Bharti Airtel stumbles on high income tax expense, misses quarterly profit estimate