Indian telco sector facing three more quarters of losses

India’s telecoms sector is facing at least three more quarters of losses due to the ongoing price war, according to industry body the Cellular Operators’ Association of India (COAI).

The Indian GSM industry body’s director general Rajan Mathews told that he believes the market’s current tariffs are unsustainable in the long term.

The industry’s woes are being added to by high license fee and spectrum charges, including high upfront payments, which has guaranteed that the current fiscal year will be tough for the industry.

The current situation commenced in 2016 when disruptive new entrant Reliance Jio Infocomm entered the market with entirely free services during an extended promotion period. The operator continues to charge only for data, at low rates.

Jio’s strategy prompted established operators to cut prices to compete, and prompted a wave of consolidation that has seen the market reduced to just three private operators – Jio, Bharti Airtel and the combined Vodafone India and Idea Cellular (now Vodafone Idea).

Mathews said that there is light at the end of the tunnel, and clarity I expected to emerge in the fiscal year 2019-2020, which begins in April next year.

But he warned that if tariffs continue to decline it will be detrimental to the health of the industry as it will threaten operators’ ability to invest in emerging technologies and in expanding coverage.