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Business

Telecom secretary Aruna Sundararajan says industry is entering final phase of consolidation

Updated : September 27, 2018 07:03 PM IST

Telecom secretary Aruna Sundararajan says industry is entering final phase of consolidation

Government on Thursday said telecom industry is entering the final phase of consolidation and by early next year, the sector will return to its normal growth path.

In an interview to CNBC-TV18, telecom secretary, Aruna Sundararajan, said, "We will have to see what the exact implications of the Aadhaar judgement would be on the whole process of e-KYC using the Aadhaar."

Watch: Need to see exact implications of Aadhaar verdict, says telecom secretary Aruna Sundararajan

Talking on BSNL and MTNL revival plans, Sundararajan said, "The objective would be to see how to bring down the debt burden on these companies for which a number of options are on the table and we will look at those. Those include monetisation of available land, bringing down the interest burden on the companies, certain dues etc."

Edited excerpts:

Q: Let me start by asking you about yesterday’s Supreme Court (SC) verdict on Aadhaar. Do you think there will be a slowdown in subscriber addition due to the verdict of disallowing Aadhaar linkage for mobile connections to telcos. Basically, e-KYC (Know Your Customer) now becomes a problem and that will need to be tweaked?

A: We will have to see what the exact implications of the Aadhaar judgement would be on the whole process of e-KYC using the Aadhaar. Prima facie, it appears that the court has held that it's not possible. We will have to get legal opinion on what exactly is possible and what is not possible. So, we will doing that and then, we will have to sit down with telecos to see that it's easy for the citizens to get on boarded for a mobile SIM. But at the same time, we will have to ensure that we are strictly in accordance with what the SC has said. Prima facie, I do not anticipate that this will have too much of an impact, but we will have to study the exact implications.

Q: Given the shape of the industry, how do you envisage attracting investments worth over $100 billion in the digital communication sector by 2022 and also have you received any commitment as yet?

A: The policy is a directional statement. It also indicates what the broad vision of the government is and what the policy roadmap to achieving those objectives is.

When we were drawing up the policy, we had a choice. We could either proceed on a business as usual roadmap in which case, the sector would have attracted the normal share of investment, but that would have meant that every Indian getting the true benefits of broadband, every grassroot institutions in India getting the benefits of broadband – that would get delayed. Second, all these new technologies that are coming in at a very fast pace like 5G, Internet of Things (IoT) etc., India wouldn’t be able to harness the true benefits of that. So, the policy actually wage the other option and said we must go on an aggressive investment oriented policy, because India needs $100 billion of investment. The point is that people will invest only looking at the return on investment in the medium to longer term. It will not be the immediate state of play in the market that people will look at, but investors are in it for the long-term.

What is happening now is that there are some fundamental shifts happening in the digital communication space. One, the backbone of infrastructure is shifting from physical to digital. As you heard, the Telecom Regulatory Authority of India (Trai) chairman, digital communications is no longer vertical. It’s becoming a kind of horizontal platform and ubiquitous fabric, which will carry various kinds of new data driven services and goods.

Q: The policy also says that in order to attract investment, the government will review levies and fees payable by telcos, which includes the licence fee, the universal service obligation fund fee, the USOF (Universal Service Obligation Fund) levy and apart from that, it will also look at rationalisation with spectrum usage charge. Could you tell us by when is the government looking to review these charges?

A: We remain committed to what we have said in the policy, and we will initiate the process of review and rationalisation at the earliest.

Q: Do you see rationalisation taking place in FY19 itself?

A: Yes.

Q: Then, what is the direction it is likely to take and do you think levies in fees will be lowered?

A: The government will have to look at two things. One, we will have to ensure that the sector is stable. Second, we will also have to see how the growth of the telecom sector triggers growth in a wider range of areas and based on that, we will have to look at what is an appropriate level of levies and tariffs.

Q: You expected the industry to return to growth by early next year and what is this predicated on and what kind of an improvement you are expecting in pricing?

A: What had happened is that India had a market with a large number of players. In the last year, we saw several very important consolidations happening. Idea-Vodafone merger, which is one of the biggest, happened, Tikona and Telenor merging with Bharti Airtel has happened.

So, I think what we are seeing is probably the final phase of consolidation and stabilisation. So, when I said that from early next year, we do expect the sector to return to its normal growth path, the thinking is that in a few months’ time, that once all these consolidations are completed, and the market structure returns to a more stable kind of structure, then I think we will also see business models not competing only on tariffs, but competing on differentiated services and differentiated experiences for the customers. So, I think that is when growth will begin in a true sense.

Q: MTNL and BSNL, both are loss-making. There are reports that the government will look at financial package, the numbers being spoken about are close to about Rs 30,000 crore. If you could walk us through the government’s roadmap for a revival for these companies?

A: The game plan of the government is that for both BSNL and MTNL - there are several new segments of opportunities opening up.

One is broadband to the home and broadband to businesses. This is a segment, which has just opened up, fiber to the home (FTTH). The big players have already started doing this aggressively. We believe that both MTNL and BSNL have advantages in this.

Second, both companies are crying out for 4G spectrum, so the effort will be to see that they get the 4G spectrum, otherwise they cannot compete effectively.

Thirdly, the objective would be to see how to bring down the debt burden on these companies for which a number of options are on the table and we will look at those. Those include monetisation of available land, bringing down the interest burden on the companies, certain dues, which they owe to the government. So all of these will be looked at.

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