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Old 16th November 2019, 00:49   #31
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

Government allowed jio to have predatory pricing from launch and to continue it after 90days, before jio it was 90 days max. 5G in india going to be delayed, no company, even jio is not in a position for new investment.
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Old 16th November 2019, 00:56   #32
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

People, know this : Pragmatically, being given a telecom license and operating through a spectrum in any sovereign nation is almost like a legal license to print money to a fairly large extent. This is the main reason why the influential people availed license, bought spectrum & sold the companies at 500x-700x profit over a few months.

The markets are filled with plenty of partial information along with abit of hysteria about Vodafone being the victim of sorts. Sometimes we may not understand the whole viewpoint and mistakenly make a scapegoat out of the wrong guy. (Jio, in this case).

Remember the astronomical data charges that only people upwards of upper-middle class could afford ?
Remember this farce called "roaming charges" wherein we were charged higher for regular calling and even for incoming calls ?
Remember there were no appellate authorities for poor service before TRAI was setup, and the Telecom companies used to think they're the law onto themselves (most still do, ever heard of a consumer winning a case against telecom companies for deficiency of service) ?

Consider that they are still making operating profits even after offering 1.4GB data and free calls for ~Rs. 4.75/- per day, imagine how much they were making and how much was probably siphoned off when competition wasn't there!

In any case, presently the main issues they're citing are :
(1) Interest :
IMO its important to remember that they're paying interest as they've availed the option to defer their liabilities towards spectrum. It was their choice to afford the same and abit rich to complain about it now.

(2) License Fees :
License fee would be rightfully charged by any sovereign nation. At most it would be OK to compare with what other equivalent countries charge.

(3) Penalties :
As it is penalties are very rarely levied for having deliberately done something wrong. World over, Govt penalties are a charge that is NOT tax deductible.

Telecom companies have minted money when they could. IMHO all this talk of writing down the valuation to 0, is just a play. I'm quite sure telecom ministry will not pay heed to these tantrums.

Quote:
Originally Posted by spookey View Post
News18 is a part of Network18 which is directly owned by Reliance Industries which also happen to be owner of Jio
And they've duly disclosed the same at the end of the article.

Last edited by WorkingGuru : 16th November 2019 at 00:59. Reason: Spelling error
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Old 16th November 2019, 03:15   #33
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

I fail to understand why everybody is making a fuss about Vodafone, and potentially Airtel going bankrupt. If you don't run your business properly, it is better you die quickly then stretch out the pain and die slowly.

For me, the government's only job is to ensure an even playing field for any company. If you have different rules for different competitors, then you favour one over the other.

As far as I can see, the AGR was implemented as a rule when Voda and Airtel started in business. We can argue about the interpretation of the rule by the SC, but this isn't a new rule which is being applied retroactively.

I say let the companies who can't survive in an open economy go bankrupt. Yes, people will be unemployed and investors will suffer a loss, but that is no reason to interfere with the free market and its functioning.
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Old 16th November 2019, 04:17   #34
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

I have scant regard for BSNL staff since they never wanted to work anyways. They'd be very happy to stay out of of any telephony - be landline or mobile, and still draw salaries. Their CEO (in one interview) says they have 'amassed huge properties/land banks that can be sold to support them'. I hope the Govt. doesn't give in to this foolish proposal, and lets them weather it out
Quote:
Originally Posted by fordday View Post
A BSNL insider always used to tell me that there are unwritten orders from top, not to venture too much into mobile telephony /internet and let the field remain open for the ahem.. private player.
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Old 16th November 2019, 13:15   #35
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

I feel the entire episode of operators going bankrupt is being blown out of proportion. When the law existed and you decided to push the payment of charges to a later date, you agreed to pay interest, penal interest, etc. Hence, the foul cry of rescuing the sector and unilaterally blaming the Government for favouring one particular telecom operator is absolutely exaggerated and ill aimed.

It is not the duty of the government to pump money into corporate, wherein the profits are private and losses should be PUBLIC! Hence, Vodafone has to pay. Period.
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Old 16th November 2019, 20:09   #36
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

Singtel (Singapore) is the largest shareholder in Airtel, and the recent news of a quarterly loss for the first time in many years has been reported widely (and critically) in the region. Competition is the basis of free-market capitalism. Any new investment in the telecom infrastructure has to be driven by international entities since India has no production capabilities in the sector, beyond ancillaries. No one will invest in a market where the ARPU is less than $2, and is unlikely to increase soon. The people who earn less than $200 a month (more than 85% of the population) won't suddenly spend more on data- they'd reduce their consumption. Taxing companies to extinction is a recipe for disaster, and history shows ample examples.

Also, there is a genuine shortage of jobs in the organized sector- telcos were major recruiters from business and engineering schools. With the economy performing the way it is, even this sector has been broken through the connivance of various vested interests. A few thousand good jobs lost forever would further deteriorate the depressing economic climate.

I often have to call 4-5 times on any Indian number (WhatsApp) because the network quality is absolutely atrocious. Would we eat poor quality food just because it is cheap if we have an option? Then why should every consumer be forced to accept network failure as a part of life? If I'm willing to pay more for data to get good connectivity, why should I not have that option? The trouble is that this segmentation process has been goofed up by the Telcos. Many would simply like 200MB per day on the mobile to enjoy a few minutes of uninterrupted calls and news reading, instead of the 1 GB that many use to watch videos etc. And they're willing to pay the same price. Trouble is, the telcos have focused on quantity more than quality, and everyone suffers because of this.

Remember how things were when there was no competition for BSNL-it took years for a landline connection to be installed. The demise of the competition will destroy the service quality and price.
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Old 16th November 2019, 20:14   #37
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

Reliance Communication follows with 30142 Cr. .. and Anil Ambani + 4 directors resign



https://www.rediff.com/business/repo...n/20191116.htm


Looks like it's going to be an overhaul in the industry now
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Old 16th November 2019, 21:16   #38
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

From what i read, I'm on the telecom's side - The govt has a history of implementing taxation rules on in whims and fancies -
Take this example
https://home.kpmg/content/dam/kpmg/pdf/2014/12/NIPL.pdf
The govt suddenly decided that the chargers in a mobile phone packaging should be taxed at 12.5% rather than the 4% applicable for mobile phones - the industry was hit with a retrospective demand for every phone sold till date - and the supreme court upheld it.
There was a huge protest from the cell phone industry, and the dept of revenue had to issue a circular saying that chargers could not be taxed separately,

At least in this case, the ton of money seems to be from the capital gains from the sale which happened long time ago - My understanding was that this was a loophole that was closed retrospectively - While i agree with the intentions, i do not agree with the methods.
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Old 18th November 2019, 11:50   #39
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

Going by all of this, is my Vodafone number safe? I am seriously thinking about porting it to Jio, as I have found on Vodafone in both Pune and Mumbai, that I have to dial a number at least 3-4 times before it connects. On an alternate Jio number never had this problem.
Suggestions?
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Old 18th November 2019, 15:25   #40
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

If one were to go by what's captured in the following article, there's more to this than what meets the eye:
https://caravanmagazine.in/reportage...polise-telecom

It's quite a long read, but in a nutshell, it talks about how Reliance wields supreme influence in the power corridors to be able to manipulate the system to it's advantage time and again.

Personally, I've felt the government to be biased right from the time Jio entered the market, starting with its so-called "trial" phase which itself was a big joke. But apparently the bias started much earlier and continues to this date.
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Old 18th November 2019, 15:40   #41
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

Quote:
Originally Posted by vivek_lm View Post
If one were to go by what's captured in the following article, there's more to this than what meets the eye:
https://caravanmagazine.in/reportage...polise-telecom

It's quite a long read, but in a nutshell, it talks about how Reliance wields supreme influence in the power corridors to be able to manipulate the system to it's advantage time and again.

Personally, I've felt the government to be biased right from the time Jio entered the market, starting with its so-called "trial" phase which itself was a big joke. But apparently the bias started much earlier and continues to this date.
Exactly, its no hidden truth on how the current government leans for certain section of businessmen. This is the case across sectors and not just Telecom.
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Old 18th November 2019, 15:48   #42
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

Quote:
Originally Posted by 2000rpm View Post
Exactly, its no hidden truth on how the current government leans for certain section of businessmen.
Sorry if my post looked like it specifically pointed fingers at the current government because that wasn't intentional. If you read through the article I cited above, the unholy nexus dates back to the previous century and had continued to flourish even in the days of many previous regimes.
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Old 18th November 2019, 16:20   #43
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

The crash of mobile telephony has very high probability of becoming true.
The only worrisome part (for me) is for all the people and families that are supported by this industry.
The market is big, but not really profitable. Neither for equipment vendors nor for service providers.

Crash of mobile telephony in India will probably act as lesson for policy makers.
The bureaucracy and judiciary in this country is completely divested from economic prosperity. Their income levels are no way connected to economic growth of country.
Why do we then expect policy making and enforcement (by judicial activism) to lead towards better economic outcome.

Some very intelligent people sitting in high offices are still blabbering about conducting 5G spectrum auction. According to some calculation method, the base reserved prices for spectrum is almost 7 times the highest price in developed countries. The operators should stay away from any such auction (for now) if they do desire to survive.
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Old 18th November 2019, 16:26   #44
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

I got a chance to speak to someone who understands this. Apparently, this ruling affects anyone and everyone including GAIL, Railways, PowerGrid


This article has summed up nicely


https://www.livemint.com/opinion/col...742777220.html

In the judgement, the apex court held that the definition of gross revenue mentioned in the licence agreement is sacrosanct and cannot be reviewed or decided by Telecom Disputes Settlement and Appellate Tribunal (TDSAT) or Telecom Regulatory Authority of India (Trai). It held that the “gross revenue of the licence" is equal to the “total revenue of the licensee company". It said all revenue arising out of non-telecom activities has to be classified as “miscellaneous revenue" and included in the total revenue of the company.




and here's the demand from DOT which is now much higher, I don't think anyone is going to pay


https://www.thehindubusinessline.com...le29965272.ece

Last edited by Turbanator : 18th November 2019 at 16:29.
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Old 18th November 2019, 17:46   #45
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Default Re: Road ahead for Vodafone-Idea? Posted the highest loss in Indian history of Rs 50,992 crore

Being a Vodafone (and before that Hutch) customer since 2006, I would like them to continue to operate profitably in India.

The current situation is quite unbelievable because India has had the MRTP act, followed by the Competition act since 1969. I cannot understand how zero pricing for any product or service has been allowed even as an introductory scheme.

Quoting a simplification of the Act from Wikipedia:

Quote:
The Act establishes a Commission which is duty bound to protect the interests of free and fair competition (including the process of competition), and as a consequence, protect the interests of consumers. Broadly, the Commission's duty is:-
  • To prohibit the agreements or practices that have or are likely to have an appreciable adverse effect on competition in a market in India, (horizontal and vertical agreements / conduct);
  • To prohibit the abuse of dominance in a market;
  • To prohibit acquisitions, mergers, amalgamations etc. between enterprises which have or are likely to have an appreciable adverse effect on competition in market(s) in India.
I distinctly remember that the DGCA stepped in to restrict the lower limit of pricing of airline tickets when there was a price war a couple of years ago. Yet the TRAI seems to be sleeping through the Jio malpractice.

Then the TRAI itself is ridiculous with orders on per-second pricing and maximum pricing, both of which really should be market-driven at least to a reasonable maximum. It is quite unreasonable to disallow even a 100Rs minimum to maintain annual connectivity, which is what the TRAI did when Airtel and Vodafone wanted to introduce this minimum for pre-paid, unlimited calling connections.

Jio has been blatantly favoured, when the incumbents haven't yet recovered from their 2G and 3G network infrastructure outlays. It is understandable that having a lower investment for just a 4G network, Jio would be able to charge less, but charging nothing at all is neither fair nor sustainable business practice.

When the dust has settled, and if Vodafone-Idea and Airtel do wind down operations, it will be the consumers who will be the biggest losers - no choice unless one considers BSNL, and no power to choose between the competition.

We on Team-BHP always talk about how rationalising prices or giving more bang for the same price is a good thing, and that competition is great for the customer. This is exactly the opposite. Which network is better, which service is better, and which provider gives me more value for my money should be the deciding factor, not government bias or lack of options.

A similar scenario would be Tata and Mahindra lobbying the government next to sell their cars at throw away prices to kill the competition, and then we'd be back to the Ambassador or PAL Padmini era of "choice".
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