By: Faisal Kawoosa, General Manager, Research & Consulting, CMR
At a juncture, when the cumulative liabilities of the telecom sector in India are in the range of INR 4.6-5 lakh crore, 150,000-200,000 people are expecting to lose jobs and revenues are dipping quarter on quarter, it was imperative to give a booster dose through budgetary provisions
The union annual budget proposed by the Finance Minister has given strategic framework to what the contours of Digital Telecom would be. Essentially, talking about five technologies, these would be the stepping stones of Digital Telecom one or the other way.
The Budget had a special mention of IoT, 5G, Machine Learning, Artificial Intelligence and BlockChain. The good part of the budget is that there are dedicated initiatives for these fundamental technologies. These technologies are going to reshape, not only communications, but almost all sectors and industries. At the same time, these technologies are bound to increase the role as well as opportunity for telecom. So, from a strategic viewpoint, the government has set the priorities in the right direction where an early and focused learning in these emerging areas will only allow us to address the opportunities better and equip ourselves with the challenges around.
At a juncture when the cumulative liabilities of the telecom sector in India are in the range of INR 4.6-5 lakh crore, 150,000-200,000 people are expecting to lose jobs and revenues are dipping quarter on quarter, it was imperative to give a booster dose for the sector through budgetary provisions. A complete, bailout would have been too much to ask and expect; however, measures should have been taken to facilitate arrestment of loses and the rising debt.
India is at the cusp of moving to the next generation of 5G. Operators shall have to prepare for spectrum buying, infrastructure investment and building use cases for the industrial as well as individual users. All this needs investment. And at the same time, operators need to keep the present show running.
Foreign Funds Coming to Rescue
From where operators would be able to have resources to prepare for the Digital transformation in the telecom sector would be one of the biggest challenges. We have already seen Idea going to the kitty of Vodafone, a global entity, and Singtel just recently announcing further investments in Bharti through preferential allotment of shares. All this is indicating that our telecom operators have no option but to look for strategic investment partners, especially foreign partners. There is no harm in attracting foreign investments, but, these should not be on a compromised pitch. That obviously gives strength to the lender to negotiate hard.
The next couple of years are going to suck in huge investments in telecom as the transformation towards a Digital Telecom player paces up. With weaker balance sheets and profit statements, the operators shall have to trade more for less, snatching their bargain power in finalising the investment deals.
This should be a matter of concern and the Budget 2018, had given the government the best of the opportunities to address it.
The transformation towards Digital Telecom shall not take place unless operators – the drivers, are also not empowered along with defining the roadmap. Unfortunately, Mr Jaitley has not taken cognizance of this fact and announced the bogies of development without aligning the driver engines as well.
Telecom is not just a sector that offers a service along with generating revenues for government and offering employment. It has graduated as an important meta-sector over which the theme of digital is to be layered as India ushers envisions as an important player in the march towards Digital Global Economy.
It just not deserves mere the arithmetic attention in an important government vision document like Budget, but, a holistic visionary approach. Hope the sector emerges even stronger without the expected support from the government and exhibits its resilience and resurgence as it prepares for the digital era of communications.