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Top telecom highlights of 2017: Interconnection Charge, IMG formation, Mergers, and more
The entire Industry has seen a hefty loss of revenu
As we all know that ever since Reliance Jio has entered the telecom sector, all incumbents are going through a bumpy ride as they are trying their level best to retain customers by launching new and attractive plans on a daily basis. This has already led to hurtful balance sheets over the months. Much more than that, due to the lower revenue generation, the entire Industry has seen a hefty loss of revenue this year.
Having witnessed the depredations among the telecom players this year, we at GizBot have got for you a couple of major highlights of year in the telecom sector, which are worth your attention.
Interconnection Usage Charges
The interconnect charges are those charges which are paid by a telecom operator to another when the former's call terminates on the latter's network. Now the Telecom Regulatory Authority of India (TRAI) has slashed interconnection usage charges to 6 paise per minute from 14 paise per minute. TRAI in its notification has also said that for Mobile to Mobile, termination charge has been reduced from 14 paisa per minute to 6 paise per minute which was deemed effective from October 1, 2017.
Inter-ministerial group (IMG) Formed
The IMG was set up in May this year to suggest reforms in the telecom sector. The sector is under a serious financial stress due to increasing pressure after the entry Mukesh Ambani-led Reliance Jio with free services and cheap data was launched. This led to massive fall in revenues and a debt of about Rs. 4.6 lakh crore. Now Telecom Commission will take all recommendations suggested by IMG.
IMG in its recommendations has proposed to extend the time period for the payment of spectrum bought in auctions by telecom companies to 16 years from 10 years.
At the Annual General Meeting (AGM) this year on July 21, Reliance Jio announced the launch of the JioPhone and as expected this also created a major jitter for both the telecom and mobile phone industry. Since, JioPhone is a 4G VoLTE feature phone, that supports 22 Indian regional languages, voice commands, and a lot of offers and schemes tied to it, it became quite a success in the market. With the growth in the demand, now the company is planning to shift its production of 4G feature phones to India. This led to a several tie-up between smartphone manufacturers and telecom service providers; Micromax Bharat series being one, and iTel another.
Mergers and Acquisition
Almost all telecom players are in a process of merging or acquiring after Jio's advent in the market. Obviously triggered by Jio surge, this year in March India's second and third largest telecom operators Vodafone and Idea Cellular respectively announced their merger in operations in India (excluding Vodafone's 42 percent stake in Indus Towers). The combined company would become the leading communications provider in India with almost 400 million customers, 35 percent customer market share and 41 percent revenue market share. Post the merger, Vodafone will hold 45 percent in the combined entity while Idea promoters will hold 26 percent share. The rest will be held by the public.
On the other hand, Airtel also announced MoU with Tata Teleservices & Tata Teleservices Maharashtra to merge their Consumer Mobile Businesses, while Reliance Communications merged with MTS.