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Telecom’s share in NPAs a concern

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Reliance Jio’s entry with free voice and data has led to a brutal price war in the telecom industry, hurting revenue and profitability of incumbents amid ballooning debt, increasing the sector’s share of non-performing assets, which is a cause for worry, the Economic Survey said.

“With the introduction of Reliance Jio Infocomm on 5 September 2016, competition extended from cheaper calls to cheaper data,” the Economic Survey Volume 2, released Friday, said.

Jio's pricing scheme “forced incumbent telecom firms” to cut voice call rates and cost of 1GB data to average $1.9 during January-March 2017, the survey added. Adjusted gross revenue of the top three telecom companies in India - Bharti Airtel, Vodafone India, and Idea Cellular – fell sequentially by 7.98 per cent, 5.14 per cent and 4.91 per cent respectively in the third quarter of FY17.

Telecom’s share in NPAs a concern Telecom’s share in NPAs a concern Reviewed by Shivi Choudhary on August 12, 2017 Rating: 5

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