Key highlights

  • Reliance Jio free services caused Adjusted Gross Revenue of telecom operators to fall 15.6% y-o-y.
  • AGR of the industry stood at Rs 40, 831 crore during the January-March 2017 quarter.
  • Revenues of telcos declined by 1.1% and 10.2% y-o-y in the December2016 quarter and the March 2017 quarter, respectively.

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For months now the Reliance Jio freebies debacle have been making headlines which led to  price wars among the telecom operators or accelerated consolidation in the industry.

The Mukesh Ambani backed company was first launched in September 2016 and gained subscribers on the back of free services under its Welcome and Happy New Year offers.

In order to defend subscriber base, incumbent operators started copying the newcomer and offered similar free offers on voice and data calls last year.

However this has caused a 15.6% year-on-year fall in revenues for the telcos, Bhagyashree C. Bhati, analysts at Care Ratings said on July 6.

“According to the data released by the Telecom Regulatory Authority of India (TRAI), the Adjusted Gross Revenue (AGR) for the telecom industry stood at Rs 40,831 crore during January-March 2017 quarter.

This implies a fall of 15.6% on a y-o-y basis. AGR includes revenues from only telecom services,” the report said.

Revenues of the telecom operators grew nearly 7-7.6% y-o-y in the first two quarters of FY17, before the launch of Jio.

Post Jio’s launch, revenues plunged falling sharply in the quarter ended December 2016 and March 2017.

ICRA pointed out.

Other demands of the industry as cited in the Care Ratings report are as follows:

  • Cut in license fee to 5% from the existing rate of 8%
  • Flat 1% spectrum levy
  • The deferred payment liability of spectrum be aligned to the life of spectrum i.e. 20 years with a moratorium of 5 years and repayment of 15 years

“The sales growth however is likely to remain weak on a y-o-y basis in the initial period of current financial year 2017-18 on account of ongoing intense competition in the industry compared to 7-7.6% sales growth registered in the first two quarters of 2016-17. This will thus impact the revenues of the government from the sector in the initial period of 2017-18 as license fee and spectrum usage charges (SUCs) are certain percentage of the telcos’ revenues,” the report added.