Economic Survey 2020:The economic survey noted that the telecom sector is experiencing consolidation as it has witnessed substantial competition since 2016, leading to financial stress. While some operators have filed for bankruptcy, others have merged in their quest to improve viability.
Although internet and broadband penetration in the country has kept a rapid pace, the cost of data has also reduced substantially.
For the quarter ended June 2019, the price of data was Rs 7.7 per GB compared to Rs 200 per GB in June 2016. The average revenue per user (ARPU) for GSM-based mobile services has also gone down substantially from Rs 126 in June 2016 to Rs 74.30 in June 2019.
“Since 2016, the sector has witnessed substantial competition and price cutting by the telecom service providers creating financial stress in the sector. As a result, the sector is experiencing consolidation,” the Economic Survey said, adding that while some operators have filed for bankruptcy, others have merged, in their quest to improve viability.
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State-owned BSNL and MTNL are also affected by the tariff war that has impacted their cash flow resulting in mounting losses.
The government has drawn up a plan to revive these PSUs. The revival plan consists of several measures, including reduction of staff cost through voluntary retirement scheme, allotment of spectrum for 4G services, monetisation of land/building, tower and fibre assets of BSNL/MTNL, debt restructuring through sovereign guarantee bonds and ‘in-principle’ approval for merger of BSNL and MTNL.
The Economic Survey said total broadband connections increased by about ten times, from 610 lakh in 2014 to 59.46 crore in June 2019. This has accelerated the growth in internet traffic, with data usage touching the highest ever level of 462 lakh terabytes in the year 2018.
“India is now the global leader in monthly data consumption, with average consumption per subscriber per month increasing 157 times from 62 MB in 2014 to 9.8 GB in June 2019,” it added.
Total telephone connections in India grew by 18.8% from 99.61 crore in 2014-2015 to 118.34 crore in 2018-19. The wireless telephony now constitutes 98.27% of all subscriptions whereas share of landline telephones now stands at only 1.73%. The overall teledensity in India stands at 90.45%, the rural tele-density being 57.35% and urban teledensity being 160.71% at the end of September 2019.