INSUBCONTINENT EXCLUSIVE:
government likely to press both telecom operators to clear their dues of nearly Rs 19,000 crore (about $3 billion) before it clears the
deal.
Bank of America Merrill Lynch, in a report to clients dated April 13, said any delay in the merger would help rivals Bharti Airtel and
Reliance Jio Infocomm gain incremental revenue market share as they could potentially poach high-end consumers from the two merging
pending licence fees, spectrum usage charges (SUC) and one-time spectrum charges (OTSC) before approving their merger.
The report added
though that the DoT was likely to be able to push for just the OTSC charges of about Rs5,713 crore, and not the other two, since the matter
underperforming a positive broader market.
Analysts, however, said that with consolidation in the financially stricken industry almost over,
the revenue recovery is inevitable
It said, though, that it expected industry revenue to decline in the current financial year, which began on April 1, by 9% year-on-year to
note seen by ET.
The government, it said, gets Rs 50,000 crore from the telecom sector, including Rs 17,000 crore a year in licence or
spectrum fees and as much as Rs 32,000 crore in annual instalments on spectrum debt.
Despite revenue recovery hopes, analysts said
competition would continue in the near term as incumbents try to hold on to revenue share and customers amid continuing pricing aggression
from 4G newcomer, Jio.
In its latest move, market leader Bharti Airtel rolled out a special customer rewards drive on Friday, offering
dollops of free data to induce its 2G/3G users to go 4G
Under the initiative, customers on 2G/3G mobile devices would be eligible for 30GB of free data when they upgrade to a 4G smartphone.
Jio
and Airtel have both also rolled out offers around the Indian Premier League (IPL) to lure cricket lovers.
The telecom industry has been
facing stiff competition for long, with tariff wars hurting telco bottom lines, although matters got aggravated following the entry of Jio,
whose disruptive tariffs compelled incumbent carriers to respond, putting further pressure on their revenues and profits.
These factors had
triggered consolidation in the telecom sector, precipitating merger announcements by some players and exits or buyouts by others
2 and 3 ranked Vodafone India and Idea Cellular to announce a merger deal, while Bharti Airtel bought out Telenor India and Tata
Fringe player Reliance Communications shut its wireless business while Aircel shrunk its own, leaving Airtel, Jio and the emerging
Vodafone-Idea combine as the only dominant private players.
