Saturday, July 2News That Matters

Dangers of duopoly

Aditya Birla group Chairman Kumar Mangalam Birla, who holds around 27 per cent stake in the debt-ridden Vodafone Idea Ltd (VIL), has put the onus on the Union Government to keep the telecom company afloat. In a letter written to Cabinet Secretary Rajiv Gauba in June, Birla offered to hand over his stake to the government or any other entity that the latter may consider worthy of keeping the beleaguered firm operational. Vodafone Idea, which has a substantial mobile subscriber base of 27.7 crore users, has been sinking deeper into the mire in recent years. It had an adjusted gross revenue (AGR) liability of Rs 58,254 crore, out of which Rs 50,399.63 crore is outstanding. The firm is also saddled with deferred spectrum payment obligations of Rs 96,270 crore and debt owed to banks and financial institutions to the tune of Rs 23,080 crore.

Birla has red-flagged the concerns of foreign investors, who are reluctant to pump their money into the company unless they are reassured that the government is keen on a three-player telecom market instead of a duopoly. According to him, investors also want clarity on AGR liability, adequate moratorium on spectrum payments and the floor pricing regime above the cost of service. The government needs to address these issues on priority and dispel doubts about its commitment to providing a level playing field.

According to data released by the Telecom Regulatory Authority of India recently, the country’s mobile market lost 62.7 lakh users in May, when the second wave of Covid-19 was at its peak. However, Reliance Jio managed to add 35 lakh mobile users even during this turbulent month, raising its subscriber base to over 43 crore. This clearly shows which way the wind is blowing. If no efforts are made urgently to stop VIL’s freefall, tens of crores of Vodafone customers will suffer. This will be a huge setback not only to the cause of digital empowerment repeatedly espoused by the government but also to India’s 5G dreams. It’s up to the Centre to make an intervention in the best interests of the public.

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