Low tariff rates are not sustainable for a longer period: Rajan Mathews

Reliance has always been known for its disruptive approach with its products, be it telecom, or any other service. And, Reliance Jio was no different, as it made the battle among the telcos fiercer. The dirt cheap prices offered from Jio led to an instant decline in the tariff plan prices from other operators.

Reliance Jio's aggressive approach also forced Vodafone and Idea to merge their operations and seek new strategies to amplify their Average Revenue Per User (ARPU). Additionally, all major operators had to alter their minimum recharge validity to 28 days in order to renew incoming calls.

Although the telecom sector surely changed for the good, all thanks to the neck-to-neck competition among the operators, it doesn't really solve the connectivity issues faced by a lot of rural areas where the people use mobiles for incoming calls only, and the latest norms do not support their cause.

To get proper insights on the matter, Gizbot interviewed Rajan S Mathews, Director General of Cellular Operators Association of India. He shared his views on how low tariff plans affecting business.

When asked about how these rates would reflect in the long run, he said, "Clearly this industry needs to do some introspection because these rates are not sustainable for a longer period."

He also shed light on the massive debt the telecom industry has over its shoulders. "We are suggesting regulatory means to look at the situation which can address and resolve this issue as telecom operators are sitting on 76 lakh crore of debt," he further said.

Speaking about the loss these major telecom operators had to face. Mathews said only Reliance Jio has managed to make profits, however, both Airtel and Vodafone Idea Limited have witnessed around 40 to 50 percent decline in their top line revenue.

"Other than Jio both Vodafone Idea Limited (VIL) and Airtel are showing a cumulative decrease in their top line revenue of the magnitude of 40 to 50 percent," Mathews added.

According to TRAI subscriber data, Jio alone garnered a customer base of 77.93 lakh in the month of February. BSNL, in turn, could only add around 9 lakh new mobile customers, taking its total subscriber base to 11.62 crores. India's largest telecom operator VIL has lost 57.87 lakh mobile subscribers during the same month.