Telco tariff hike to benefit users, boost govt revenue, create jobs: COAI

Telecom (Photo- Bloomberg)

Rise in the price of mobile calls and internet rates is beneficial for customers, will boost government revenue collection and help in creating jobs by improving financial health of the sector, telecom industry body Cellular Operators Association of India said on Monday.

Telecom operators Bharti Airtel and Vodafone Idea have announced to raise mobile calls and internet prices for prepaid customers by to 50 per cent from December 3, while Reliance Jio has said it will roll out new plans with 40 per cent higher rates on December 6.

"This (rate hike) is going to be in the benefit of customers, government and the industry. From customers' perspective, these tariffs will enable operators to do required and necessary improvements in the telecom network which has been languishing because of financial stress in the sector. In the upcoming short period, we should begin to see improvement in customer experience and services," COAI Director-General Rajan Mathews said.

This is the first hike in the past five years in the country's telecom space that was facing tariff war, with voice calls becoming almost free in 2016 and steep 95 per cent fall in data prices to Rs 11.78 per GB at present from Rs 269 per GB in 2014.

From Tuesday, customers of Bharti Airtel and Vodafone Idea will have to shell out a minimum of Rs 49 to make calls, access the internet on mobile and stay connected for four weeks.

Mathews said that due to a decline in mobile services rates, government revenues have also declined.

"We believe this will help the government in its collection at a time when collections of the government are being challenged," he said.

According to official data, the telecom sector's gross revenue fell about Rs 41,000 crore in three years on account of a dip in mobile services rates.

The telecom sector's gross revenue in 2016-17 was Rs 2.65 lakh crore, which had reduced to Rs 2.46 lakh crore a year later and then to Rs 2.24 lakh crore in 2018-19.

Adjusted gross revenue, on which the government earns revenue, also declined by around Rs 46,000 crore during the same period.

Mathews said the industry has been in doldrums and the hike in tariff will bring needed financial wherewithal to enable them to make investments.

He said Prime Minister Narendra Modi's vision of Digital India requires over $100 billion worth of foreign investments into the country and the new tariff will help the sector in attracting foreign funds and help domestic banks in lending to the industry.

"This will help operators to begin to hire again. We have been losing employees because of our inability to retain them. Also, because several of operators have exited the business. With this particular move, we see financial health improving. This means better remuneration for employees, better purchasing power to them," Mathews said.

Telecom Sector Skill Council CEO Lt Gen S P Kochhar said the hike in tariffs will provide companies to invest in expanding optical fibre network and rolling out telecom networks.

"As per our estimates, four persons at every gram panchayat level will be required to maintain telecom networks. Laying fibre is a must for the country and it will create jobs on the ground. However, in the long term, we see a need for high-end jobs in the telecom sector and most of the manual jobs will either be automated or outsourced," Kochhar said.

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