Telcos expect lower compliance cost in Budget 2017: Arpita Agrawal of PwC

The leader and partner (Telecom), PwC was responding during a Business Standard live chat

Calling the effect of Reliance Jio disruptive in the telecom industry, Arpita P Agrawal, partner & leader (Telecom), PwC, said the sector expected an announcement related to the reduction in compliance costs in Budget 2017. 

Agrawal also underlined that government should step up its efforts to create awareness on cyber security. 

She was responding to questions on expectations of the telecom sector from Budget 2017 during a Business Standard live chat. Excerpts:

What are experts expecting Finance Minister Arun Jaitley to announce for the telecom sector in Budget 2017? 

Incentives for digital adoption by the masses, reduction in compliance costs and resolution of pending taxation issues in the sector.

With Reliance Jio changing the dynamics of the telecom sector and other operators following its lead, can we see a mega announcement in the Budget regarding spectrum auction or tariffs?

Spectrum auction and tariff is an area which is under the purview of licensor DoT and regulator TRAI, therefore no specific announcement is expected in this budget.

If market consolidates to four companies as everyone has been saying, will consumer still be the king?

The consumer will be king when they not only get affordable pricing but also get the desired quality and services. It is expected that post-consolidation each operator will try and achieve that goal.

Now people are saying 5G is coming very soon. Are telcos acting smart and packaging old wine in new bottle? Shouldn't the government enact a leapfrogging policy to protect people?

Technology is moving at a breakneck speed and Telcos have been trying to keep pace. Each technology enhancement has entailed significant capital expenditure by the Telcos and is done with the intent to bring in the latest in class to the Indian customer. Agreed that not every technology upgrade has been adopted in full but the reason lies in a whole host of factors such as awareness, affordability, network reach, handset availability etc.

Kindly outline the steps the government should take to ensure security and privacy of individuals in the cyber world. 

Awareness at an individual level about cyber security vulnerabilities and privacy threats need to significantly go up. The government should work with all stakeholders to increase the cyber literacy levels so that individuals do not fall prey to fraudsters. Additionally, operators need to adopt adequate security measures at their end.

Service quality is still a major issue and there is no respite even after regular follow-ups and orders from TRAI. How can this issue be rectified?

Service quality is dependent on issues such as Capex investments, right of way, network dimensioning etc and the same is being discussed at various forums. However, to a large extent, consumer tariffs will have to go up to get the desired quality levels. Reducing taxation on the sector will also help operators invest more.

How long do you think it will take for India to provide free Wifi to its citizens? Will this budget give that boost?

Free Wi-Fi on a large scale is not a sustainable business model and it is unlikely that a specific announcement will be made regarding the same.
 

Will the government provide any relief for the sector so that there is a chance for tariff reduction?

Reduction in taxation and compliance costs has been a long-standing demand of the industry and we await such relief in the Budget especially in the light of the fact that the industry is laden with high debt.

How do you assess the impact of Jio on the sector? Yesterday, Airtel announced its Q3 results, its net profit has declined 55 per cent?

The impact of Jio has been disruptive and has forced all sector players to re-look at their business model and pricing strategies.

Do you think the business model adopted by Jio -- all about free services -- is sustainable in the longer run?

Free services are not sustainable in the long run and Jio has already made announcements to this effect that they will commercially launch in the coming months.

Will the government provide any relief for the sector so that there is a chance for tariff reduction?

Reduction in taxation and compliance costs has been a long-standing demand of the industry and we await such relief in the Budget especially in the light of the fact that the industry is laden with high debt.