Dept of Telecommunications removes 3% floor rate on spectrum usage charges payments

Source: Financial Express, 23 June 2022

In a relief for telecom operators, the Department of Telecommunications (DoT) has finally removed the 3% floor rate on spectrum usage charges (SUC), a move which would in the long run make such payments zero on their entire spectrum holding. FE had reported in its Tuesday edition that operators had expressed their disappointment on Monday at a pre-bid conference that the government, despite committing to remove the floor in September 2021, had not yet notified it. They had pointed out that the non-removal would make the whole exercise of not charging SUC now onwards meaningless.

“We have clarified that the SUC floor has been removed. Whatever the telecom operators are paying now, that percentage will be reduce in future,” an official in DoT said.

The notification issued on the removal of the floor said that spectrum acquired through auctions held after September 15, 2021 in different access spectrum bands, will not attract SUC.

The floor was fixed in 2016 to protect government revenues as SUC charges at that time was lowered to 3% as an incentive to participate in auctions. Before that operators used to pay between 3%-8% as SUC for spectrum acquired administratively and through auctions. The government came out with a weighted average formula in 2016 that was designed in such a way that with time as operators acquire more spectrum in auctions, their SUC would come down from say 4.5-5% to 3%. It could have gone below that hence a floor rate was fixed.

The removal of the floor rate was required to give effect to the telecom relief package announced by the government in September 2021, where apart from providing a four-year moratorium to operators on their AGR and spectrum dues, the government had also said that there would be no SUC on airwaves acquired in future auctions.

HMD Global starts exporting feature phone from India

Source: Economic Times, 10 December 2021

NEW DELHI: HMD Global, which sells the Nokia brand of mobile phones, on Thursday said it has started exporting its Nokia 105 feature phone to the UAE market, leveraging its partnerships with local players in India. Speaking to PTI, HMD Global Vice President (India and MENA) Sanmeet Singh Kochhar said the first device being exported is Nokia 105, the number one selling feature phone in India and globally.

“We have started exports from India. Till now, all of our phones sold in India are made in India. Not only are they made in India, but we are also focussing on making them with Indian manufacturing partners and we are now kickstarting exports from India,” he added.

He noted that the Nokia 105 will be exported from the company’s partner factory in Sriperumbudur in Tamil Nadu, and the UAE is the first country where the device will be exported.

Kochhar said there is strong relevance for feature phones even now and various use cases – right from low entry cost, lower recurring costs (no data costs) to longer battery life and repair costs.

DoT cuts bank guarantee requirement for telecom operators by 80%

Source: Business Standards, 07 October 2021

The Department of Telecom­munications (DoT) on Tuesday announced slashing the performance and financial bank guarantee requirements of telecom operators by 80 per cent.

According to a licence amendment note, telecom operators will be required to provide a performance bank guarantee of up to Rs 44 crore for each service for the telecom licence compared to Rs 220 crore mandated under the old rule.

Similarly, telecom operators will need to provide a financial bank guarantee of a maximum Rs 8.8 crore per circle now, against the previous requirement of Rs 44 crore.

The move will benefit companies as their cash requirement would come down. It will unblock the cash of telecom operators that they keep with banks to furnish bank guarantees.

The rule will not be applicable in cases where bank guarantees have been furnished due to any court order or are subject to any litigation, the licence amendment note said.

The rules will also not apply to telecom operators, who are currently going through a liquidation process.

Even under the relief package approved by the Union Cabinet, the government plans to return bank guarantees worth Rs 14,000 crore to Vodafone Idea (Vi) and Rs 8,000 crore to Bharti Airtel if they opt for a four-year moratorium on payment of spectrum dues.

Under the relief package, the bank guarantees have been rationalised, which will lead to a reduction in bank guarantees requirements against the licensee fees and other levies. The requirement of multiple bank guarantees has been done away with and the companies now can have one bank guarantee for different licensed service areas.

The interest rates have been rationalised and penalties removed. For future spectrum auctions, no bank guarantees will be required to secure instalment payments. The relief package is expected to uplift the current players besides luring international investment. To encourage investment, 100 per cent Foreign Direct Investment under automatic route has been permitted in the telecom sector, with all safeguards.

Airtel plans co-branded handsets to take on Jio in move to ringfence 2G subscribers

Source: Economic Times, 14 September 2021

Bharti Airtel is considering co-branded smartphone deals with handset makers and bundled data and voice offers to bring down the effective price of a smartphone, as the company seeks to ring-fence its 2G subscribers ahead of the JioPhone Next launch.

The Sunil Mittal-led telecom operator, however, is clear that it wants to avoid the handset subsidy game as opposed to rival Reliance Jio, which is expected to heavily subsidise the JioPhone Next to keep the price low in a bid to entice Airtel and Vodafone Idea’s 2G users, people familiar with the matter said.

Airtel has floated a request for proposal (RFP) for handsets, and manufacturers including Lava, Karbonn and HMD Global have shown interest and are ready with possible devices and specifications, they said.

Airtel, Lava and HMD didn’t respond to ET’s queries till press time Monday, while a Karbonn spokesperson declined to comment.

Airtel is trying primarily to protect its nearly 120 million 2G users, who may be vulnerable to Jio’s attempts to attract them to its network with an affordable 4G smartphone. Jio is claiming that the JioPhone Next — designed with Google — will be the world’s most affordable smartphone with specs associated with far higher-priced devices.

Airtel has also decided the specifications for a possible smartphone in tie-ups with handset brands, but is awaiting Jio’s pricing and offers, the people said.

Jio recently postponed the launch of its smartphone to around Diwali from September 10.

“Airtel’s device offering is ready but the question is subsidy and if they would be able to match Jio’s offering. Airtel has sorted out specifications but it will be difficult to match the pricing with subsidy for them … but it will come up with an offering,” one of the people said.

Meanwhile, some industry trackers said the ongoing component shortage and consequent price increases might restrict the headroom for the amount of subsidy Jio could provide. Jio is believed to be targeting to sell the 4G smartphone at ₹3,500-4,000.

One of the people ET spoke to said Airtel would try to capitalise on the buzz in the market created by Jio to migrate its feature phone users to the 4G network with partner smartphone brands. The company had in the past launched a “mera pehla smartphone (my first smartphone)” initiative, which it could revive.

Industry executives said handset makers would commit volumes for the Airtel tie-up depending only on the carrier’s final offering, since they would want to avoid “inventory risks”, especially when the industry was dealing with a component shortage and supply delays.

Airtel chief executive Gopal Vittal recently said he didn’t believe that the handset subsidy route was the right one, adding that Airtel had clarity on “how to deal with this (JioPhone Next)”. The company had done pilots with original equipment makers (OEMs) for affordable handsets besides partnering with banks to offer lending options to customers, he had said. “…having said that, it is a competitive industry, we will look at what happens in the marketplace through a combination of good marketing optics and capability and platforms around locks,” Vittal had said.

Industry executives, however, said offering loans had become tricky as lenders weren’t really bullish on the segment of customers Airtel would be targeting, since most of them would not have a credit history and the lenders might not have a strong mechanism to recover dues.

Ashwinder Sethi of consulting and analyst firm Analysys Mason said the upfront cost of a reasonable entry-level smartphone — about ₹6,000-7,000 — was a big deterrent for many of the current featurephone users in India to upgrade.

Reliance AGM 2021: Ambani introduces ‘ultra-affordable’ JioPhone Next, co-developed by Google

Source: Hindustan Times, 24 June 2021

Reliance Industries Ltd chairman Mukesh Ambani on Thursday announced that Google and Jio partnered to develop a smartphone especially for the Indian market, JioPhone Next. Addressing the shareholders at Reliance Industries’ 44th AGM, Ambani said that the JioPhone Next smartphone is powered by an extremely optimised version of the Android operating system. The smartphone will be available from September 10, 2020, the “auspicious date of Ganesha Chaturthi” this year, he added.

Announcing the product, Ambani said that JioPhone Next is ultra-affordable and packed with cutting-edge features like voice assistant, automatic read-aloud of screen text, language translation, and smart camera with augmented reality filter.

“This is a testimony of a global technology giant and national technology champion working together to make truly a breakthrough product that can be first introduced in India and then taken to the rest of the world,” said Ambani while talking about the partnership with Google.

Google CEO Sundar Pichai said that at a time when so many aspects of people’s lives are moving online, it is more important to make technology accessible and helpful for everyone, adding that such a goal is at the heart of our partnership with Reliance Jio. In a video address at the Reliance AGM, Pichai said that Google’s vision was to bring affordable access to information for Indians in their own language and to build new products and services for India’s unique needs.

“Next steps in this vision start with a new, affordable, Jio smartphone, created with Google. It is built for India and it will open up new possibilities for millions of new users who will experience the internet for the first time,” he said.

Ambani also highlighted the growth of Reliance Jio in the data carrier market, saying it has become the first operator outside China to cross 400 million subscribers in a single country. He noted that Reliance Jio is world’s second largest data carrier, handling 630 crore gigabytes of data traffic every month.

Recovery to continue for India’s telecom sector in FY22

Source:, Mar 25, 2021

NEW DELHI: India’s telecom sector will continue on the path of recovery in the next financial year starting 1 April, amid consolidation that will lead operators to focus on digital transformation of their businesses.

According to India Ratings and Research, the second round of consolidation in the industry, which has kicked in, will drive telecom companies from being providers of traditional voice-only services to complete digital solutions for households that would enable customer retention.

Also, conducive regulatory environment will improve the sector’s performance. The credit rating agency has maintained a stable outlook for the telecom sector in FY22.

“Providing one or more of the services such as broadband services, cable TV services (direct -to-home), enterprise solutions (B2B), e-payment wallets/platforms, music applications and over-the-top (OTT) transmission platform, in a bundled form along with the traditional wireless mobile services has now become the need of the hour, to ensure customer stickiness and widen the market footprint,” it said.

The surge in data usage in the past one year and rising proportion of high-paying customers indicates that the sector is moving towards higher average revenue per user (Arpu), despite no tariff hikes. Competition among telcos has also intensified, as is evident from narrowing tariff differentials.

The development in the coming quarters will be key to the sector as it will determine whether “India’s mobility market will remain a 3+1 player market or will transition to a 2.5+1 player market, and how telcos will respond to the next phase of consolidation in the industry”, India Ratings said.

It should be noted that the entry of Mukesh Ambani-led Reliance Jio Infocomm Ltd in September 2016 in the country’s telecom space and its almost-free voice and data services caused massive disruption, forcing other players to drastically cut prices. Since then, while most firms exited their businesses, only Bharti Airtel Ltd and Vodafone Idea Ltd survived the brutal tariff war but continue to deal with high levels of debt.

In the December quarter, revenues of telecom sector rebounded to levels seen in the years prior to Reliance Jio’s launch. Net mobile revenues rose 4.5% sequentially to $25 billion in October-December, according to data issued by the Telecom Regulatory Authority of India (Trai). The last time the sector earned $25 billion was in the June quarter of calendar year 2016.

The average revenue per user (Arpu), a key performance metric, of Bharti Airtel plunged to Rs100 per month in Q2FY19, from Rs196 in the first quarter of fiscal 2017. Prior to its merger with Vodafone, Idea’s Arpu stood at Rs181, which fell to a record low of ₹88, for the combined entity in the September quarter of 2019. Jio had an Arpu of ₹131.7 in the September quarter of 2019.

Telecom sector headed for second round of consolidation, says report

Source: Business Standard, Mar 23, 2021

Mumbai: Providing services like broadband connectivity, cable TV, enterprise solutions, and payment wallets is the need of the hour for telcos, and a second wave of consolidation is upon the industry, a rating agency said on Tuesday.

India Ratings and Research said the sector, which was battered following the aggressive entry of Reliance Jio, will continue showing signs of recovery amid conducive regulatory environment and maintained a “stable” outlook for the industry in FY22.

The second round of consolidation (Consolidation 2.0) is kicking-in in the industry, which will bring a transformation in the business models of telecom companies, leading to the evolution of incumbents from the providers of traditional voice-only services to complete digital solutions for households, it said.

Along with wireless mobility, telcos will have to provide services such as broadband connectivity, cable TV services (direct -to-home), enterprise solutions, e-payment wallets/platforms, music applications and over-the-top transmission platform.

Such bundling of services along with the traditional wireless mobile services has become the “need of the hour” to ensure customer stickiness and widen the market footprint, the agency said.

It can be noted that the sector was once a very busy field with up to half a dozen operators to choose from. However, in the last five years, operators like Vodafone and Idea went for a meger, some retreated and some were also forced to go into bankruptcy because of the financial difficulties.

Among the operators, it said Jio has strong or moderate presence in all the allied services, except enterprise segment where it is non-existent, while Bharti Airtel lacks broadcasting presence and Vodafone Idea doesn not have a presence in broadcasting, payment wallets and direct to home.

The increasing data usage and rising proportion of higher average revenue per user data customers in the overall subscriber mix indicate that, even without tariff hikes, the sector is structurally moving towards a higher- average revenue per user regime, it said.

Competition intensity has alleviated over the last one year, as evident from narrowing of tariff differentials among telcos, it said. Evolution of the industry over the coming quarters will remain a key monitorable since it will determine whether the Indian mobility market will remain a 3+1 player market or will transition to a 2.5+1 player market and how telcos will respond to the next phase of consolidation in the industry, the agency said.

Telecom advertising in India to grow at 11% by 2023: Report

Source:, Mar 22, 2021

New Delhi: India will be the fastest-growing market for telecom advertising between 2020 and 2023, registering an 11% annual growth, said a report by media agency Zenith.

This is much higher than the telecom advertising globally which is predicted to grow at an average rate of 4.5% a year to 2023 as its recovers from an 8.7% decline in 2020, according to Business Intelligence – Telecommunications report, published on Monday.

Telecom ad spend in the 12 key global markets included in the report will rise from $17.8 billion in 2020 to $18.7 billion in 2021, and then return to its pre-pandemic level of $19.5 billion in 2022.

Telecom segment comprises services and equipment facilitating the transmission of voice calls and data by land lines and mobile networks.

According to eMarketer, only 31% of the population in India currently has a smartphone, but thanks to the launch of low-price handsets such as the Jio phone, this proportion is rising rapidly.

“The telecom sector in India in 2021 is anticipating a robust growth on the basis of an increase in tariff pricing, demand for data, growing number of mobile users and hopefully the launch of 5G in the last quarter. This will lead to a substantial increase in media investments by the key players especially on television & digital,” said Jai Lala, COO, Zenith India.

While most of the global markets are forecast to grow between 3% and 6% a year to 2023, Russia will grow at 8% and France at 6%.

In terms of key trends, the report stated that smartphone sales will start to spring back this year once consumers feel more confident in their future. Consumers are becoming more willing to finance and purchase handsets independently from their network providers, giving manufacturers and retailers a greater incentive to advertise handsets themselves.

Meanwhile, the networks will seek to recoup their investment in 5G licences and infrastructure through new services and more expensive data packages.

Globally, telecom brands are cutting back their spending on traditional media platforms.

Zenith forecasts that between 2019 and 2023, telecoms brands will reduce their television ad spend by an average of 2% a year, compared to a 3.5% annual reduction across all categories. They will also reduce their radio ad spend by 2.8% a year, compared to 4.1% a year for the market as a whole.

Telecom brands will increase their digital ad spend at an average rate of 5% a year between 2019 and 2023. By 2023, digital advertising will account for 54% of all telecom advertising. “Covid-19 has demonstrated how dependent we are on good, fast and reliable internet connections. Telecoms companies have been the unsung heroes of the pandemic, shifting our lives online and keeping us connected to entertainment, work and commerce. The spread of 5G and the reality of our new-found virtual lives give telecom brands the opportunity to move into the limelight,” said Ben Lukawski, global chief strategy officer, Zenith.

Govt to amend telecom licence norms to control sourcing from China, non-friendly destinations

Source: The Economic Times, Mar 08, 2021

The government is likely to amend the telecom licence norms this month to incorporate the guidelines of national security directive on telecommunication sector that will help in controlling installation of network equipment from China and other non-friendly countries.

Under the provisions of this directive, the government will declare a list of trusted sources and trusted products for installation in the country’s telecom network.

“DoT is almost ready to amend licence conditions to incorporate guidelines NSD (national security directive). It should be done in the coming week,” an official source said.

Notably, Chinese telecom gear maker Huawei has had its run-ins in the past with the governments of Canada and the US. The US has alleged that it did not comply with its cybersecurity and privacy laws, leaving the country and the citizens vulnerable to espionage.

The list of the trusted source and product for installation in telecom networks will be decided based on the approval of a committee headed by the deputy national security advisor.

The committee will consist of members from relevant departments, ministries and will also have two members from the industry and independent experts.

The directive, however, does not envisage mandatory replacement of the existing equipment already inducted in the network of telecom operators and it will also not affect annual maintenance contracts or updates to existing equipment already inducted in the network as on date of effect of the directive. While the government has not barred procurement of equipment from Chinese companies, it amended the general financial rules (GFR) 2017 to enable the imposition of restrictions on bidders in public procurement from countries that share a land border with India on grounds of defence of India, or matters directly or indirectly related thereto, including national security.

Public companies need to scrap tenders if a qualified bidder is from a country that shares a land border with India, which includes China.

Customers may face higher tariff as telcos increase investment in network

Source:, Mar 03, 2021

Investments in spectrum and equipment to build robust network ahead of the roll out of 5G wireless service will require telecom operators to raise prices of voice and data services in the medium term but they may not do it immediately, said analysts.

As a result, customers may have to shell out more for the services they avail due to tariff hikes. Bharti Airtel Ltd’s management has said the telco will not lead in the next tariff hike, while rival Vodafone Idea Ltd has maintained that it will not shy away from moving first in the industry.

With its new offers on 4G feature phone, JioPhone, launched on 1 March, Reliance Jio Infocomm Ltd may not look at raising prices in the near term as it aims to acquire 300 million low-end 2G customers on other networks, analysts said.

“While Jio is likely to focus on reviving subscriber growth in the near term, over the medium term, it will have to take price hikes to support network investments and the upcoming 5G roll out, in our view,” Credit Suisse said in a report.

To augment their coverage and improve service quality of 4G services, Reliance Jio and Airtel placed bids for spectrum higher than the expectations of the government and analysts.

The telcos bought airwaves in the sub-gigahertz (sub-GHz) bands, with Airtel intending to use them for indoor penetration and expand its rural footprint, while Jio aims to add more subscribers by focusing on customer experience.

In the current fiscal, Jio’s net subscriber additions have slowed to 7 million a quarter, a 65% decline from the 20 million it added every quarter in the previous year. It added only 478,917 users in December versus rival Airtel’s addition of 4.1 million.

“We think the auction bid placements should further strengthen the two larger operators (Airtel and Jio), both of which remain well positioned to gain market share from Vodafone Idea Ltd. With large investments in network, tariff hikes are inevitable, in our view,” said BNP Paribas in a report.

Reliance Jio acquired spectrum of ₹57,122.65 crore, while Airtel bid for airwaves worth ₹18,698.75 crore. Jio bought spectrum worth ₹34,491 crore in the 800MHz band alone, which was due for renewal in 18 of 22 telecom circles in the country.

The delay in tariff hike, however, could be a cause of concern for Vodafone Idea, which bought airwaves worth only ₹1,993.40 crore, mostly for renewal due to large spectrum holding and stressed financials. “The cash outgo will be keenly watched given high debt level of the incumbents and continued delay in tariff hike. This could lead to funding gap concern for Vodafone Idea given continued delay in raising fund, high debt level, and renewed pricing aggression in some segments,” Axis Capital said in a report.