Earthquake in the Telecom Industry

Earthquake in the Telecom Industry

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Highlights:

• 6p/min-All telecom company has to give fine to the government and the total amount is 90,000 crores.
• Result of the supreme court of case 2007
• Will all telecom companies close after 2020?

There was a day when too many operators were there like BSNL, MTNL, Airtel, Reliance Communications, Aircel, Vodafone Esser, Idea cellular, Virgin mobile, Uninor...But now out of all only 4 operators are left in the market.

1. Airtel
2. Reliance Jio
3. Idea+vodaphone
4. BSNL+MTNL

Jio is charging 6p/min reason they gave is IUC charges. According to TRAI rule if any outgoing call is done to any operator they have to give 6p/min.

The case in the supreme court was running regarding the revenue charge since 2007  and its final result came in October 2019. As the result came every operator got shocked. Supreme Court result came on AGR (Adjusted gross revenue). To understand what is AGR let us go back when all the operators came in the year 1992-1999. In those years when anyone want to be an operator then they have to go to the government they will issue a license and spectrum you need.

Now, the question might arise in your mind that what is the spectrum? the spectrum you can call it as registration of company. Your network comes from the frequency present in the air this frequency is called a spectrum. It is sold to operators by the government.

Before 2002 the operator has to pay Rs.20-25 crore per year and use it as much as you can but after 2002 this model is renewed. In which Government said that they will not collect the fixed amount. They will take (%) of all your revenue. Revenue was 8%  spectrum, 4% license fees. Now the point comes is which things can be revenue?

 The debate was going on this "Revenue" between the operators and Government. Operator understood revenue as the things they are operating like customers calling, recharging...then the profit on it was they are calling as a revenue. But the Government said everything can be taken as revenue ex. If you have land for network/tower but if you give that land on rent then they can also count it in as revenue. Then the high authority court 'Supreme court' solved the case in October 2019 on revenue which was running since 2007.

After this result, every operator has to pay fine
for:
Airtel- Rs..21,000 crore
Vodaphone+ Idea-Rs. 27,000 crore
Reliance CDMA/GSM-Rs. 16,000 crore
Reliance Jio-Rs. 13 crore
In which the lowest fine was on Reliance Jio because it comes recently before 2-3 years.
After these results and fine, it seems like soon there will be only one operator that will be left in the telecom company. If this will happen then that telecom company can charge as much as they want because we don't have any other operator to switch over it.

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