Assessment of Telecom Industry in India – From 2007 to 2020

Aakash Agarwal, Kritika Sharma and Vignesh Ramanan
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Aakash Agarwal: Doon University, Mothrowala Road, Kedarpur, P.O. Ajabpur, Dehradun, Uttarakhand - 248001, India.
Kritika Sharma: Doon University, Mothrowala Road, Kedarpur, P.O. Ajabpur, Dehradun, Uttarakhand - 248001, India.
Vignesh Ramanan: Doon University, Mothrowala Road, Kedarpur, P.O. Ajabpur, Dehradun, Uttarakhand - 248001, India.

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Abstract: The telecom industry in India underwent drastic changes over the past 13 years. It has gone from being the darling of investors in 2007 to being among the most heavily indebted industries in the country. This is a descriptive study that aims to analyse the past decade's events to understand the reasons behind the indebtedness of telecom operators and stress in the industry. The study showed that the government regulations facilitated high levels of competition, with over 16 operators in the industry at its height, which put pressure on the pricing power and profitability of the operators. High reserve prices in spectrum auctions caused overbidding, contributing significantly to the industry's debt. Taxes and levies eroded the operators' profit margins. Coupled with the obligations of servicing the debt, it is no surprise that the industry was under tremendous stress. The services of Reliance Jio offered at near free prices led to a wave of consolidation in the industry. From over sixteen operators, the industry currently has four. The current stability in the sector is fragile and any regulation or policy must be carefully measured before implementation.

Date: 2021-05-10
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Published in Asian Journal of Economics, Finance and Management , 2021, 3 (1), pp.168-183

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05188026

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