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‘Jio Aur Jeene Do’: After Reliance Shake-Up Of Telecom Sector, Government May Step In With Relief, To Resolve Woes
Representative image. (Vijayanand Gupta/Hindustan Times via Getty Images)
The government is considering a proposal to step in and provide a relief package to some telecom firms that are under considerable financial stress, reports Economic Times (ET). The telecom industry contributes to around 6.5 per cent of India’s total GDP and provides direct and indirect employment to around 40 lakh people.
Since the public rollout of Reliance Jio mobile network in September 2016, the industry has been engulfed in a race to the bottom. In a bid to capture market share, Jio offered near-zero prices on mobile data and calls to its subscribers. In response to this, existing firms like Airtel and Vodafone responded with their versions of aggressive pricing. The entry of Jio also forced consolidation in the industry with Vodafone and Idea Cellular announcing a merger.
However, the revenues of all participating firms took a hit and are not enough to cover the costs. Sunil Mittal, Chairman of Bharti Airtel, also stated that the telecom sector was taxed like the tobacco industry and this has contributed to the stress in the industry.
While Airtel’s profit for the September quarter fell by 65.4 per cent, Jio posted a net income at Rs 681 crore. Vodafone India, India’s largest telecom company by subscriber count, posted losses of Rs 4,974 crore for the quarter. It also missed a Rs 900-crore spectrum linked payment to the government.
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