Jio effect? Telecom industry is at its weakest, govt will have to step in
Indian telecom industry is at a critical juncture & improvement is crucial for its long-term health Breaking news : The Indian Telecom sector has been under pressure for the last 8 years because of rising competitive and capex intensity. During this period the contribution of telecom services to GDP has declined from 2% of GDP in FY09 to just 1.2% in FY17. The return ratios for the telecom players has also consistently declined during the period and all the telecom companies do not manage to earn their cost of capital because of continuous investments in spectrum purchases. While competitive intensity has changed with entry and exit of players, the capex intensity has consistently risen because of spectrum auctions. The industry at this juncture is at its weakest because of the high degree of financial leverage and margins impacted by rising competition from new player Reliance Jio . In the current state, the industry has insurmountable challenges which are leading to h...