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3 more quarters of losses for telecom industry, says COAI

Reliance Jio’s arrival has set a tariff war in the market, forcing other telcos to cut tariffs

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MUMBAI: According to COAI director general Rajan Mathews, the telecom sector will probably experience three or more quarters of losses, as the telcos remain under pressure due to high levies and unsustainable tariffs.

Speaking to PTI, Mathews said, “Under the current scenario, I see at least another three plus quarters of losses. Why? Because personally, I do not think the present tariffs are sustainable for long term health of the industry.”

Mathews explained that the high incidence of levies - licence fee and spectrum usage charges – intermingled by upfront payment for radio-waves have added to the operators' woes. Taking that into account he stated that 2018-19 will certainly be a "tough year" in terms of financial performance of the industry.

“Already we have been through two quarters of losses (this fiscal). So something dramatic has to happen in the next two quarters and we know that is not going to happen. Clearly, 2018-19 will be a tough year in terms of financial performance for the industry but the beginning of fiscal 2019-20 will see clarity (emerging),” he added.

When asked about whether the mobile rates will fall further or stabilise, he told, “The tariffs are already at affordable levels. It is difficult for me to see how much further the tariffs can drop.”

He also described that the continuous decline in revenue stream would be unfavourable for the industry as telcos will need investments for updating technology and for wider and better coverage.

Reliance Jio had set off a tariff war since its arrival in the market. In counter to Jio’s services, rival companies such as Bharti Airtel and Vodafone Idea had to cut tariffs.

Bharti Airtel reported a loss of Rs 940 crore from its mainstay India business for the June quarter. However, Airtel in the April-June period reported a net profit of Rs 97 crore on a consolidated basis after taking into account revenues from its Africa business.

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