Freebies by Jio hit govt's licence fees, spectrum charges

Also said it could impact repayment capacity of the sector and even lead to payment default

Freebies offered by Reliance Jio at its launch in September last year created a downward pressure on the incumbent telecom operators’ tariffs, in turn leading to a revenue loss for the government, said the Telecom Commission at a meeting on Wednesday.

It also said if this trend continued, it could adversely impact the repayment capacity of the sector and even lead to payment defaults. The licence fee collection in the current financial year (2016-17) showed a downward trend, falling from Rs 3,583.9 crore in the July-September quarter (Q2) to Rs 3,166 crore in October-December (Q3).

There was a similar downward trend in the spectrum usage charges, which declined from Rs 1,820.03 crore to Rs 1,553 crore in Q3.

Reliance Jio launched its services on September 5, 2016, and offered promotional tariffs up to December 31. The offer was extended to March 31.

The Telecom Commission said the promotional offer and continuation of promotional tariffs has led to intense competition in the market. The incumbent service providers were forced to offer similar tariffs to retain customers.

In January, Airtel launched a special offer of additional 3 GB of data each month for a year for customers who switch to its services from rivals and opt for mid-to-high plans. Vodafone followed, announcing increase in data usage limit across select, unlimited calling plans while offering 3 GB additional mobile broadband for customers who upgrade to new 4G services. Idea Cellular also joined the race, a similar plan.

The telecom sector’s top decision making body said an impact on investment capacity had a cascading effect on revenues. The industry had invested Rs 3.4 lakh crore in purchasing spectrum since May 2010. Service providers had opted for deferred payment.

The commission said it feared the possibility of companies defaulting on repayment of loans and installment of deferred payment for acquisition of spectrum in earlier auctions cannot be ruled out.