Indian Mobile industry to consolidate further if government doesn't offer material relief

WION Web Team New Delhi, Delhi, India Nov 18, 2019, 05.24 PM(IST)

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Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT). 

The Indian mobile industry will consolidate further if the government does not offer a material relief on adjusted gross revenue (AGR) liabilities, regulatory levies and potentially a floor on pricing, according to Kotak institutional equities.

Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT). 

According to the DoT, the calculations should incorporate all revenues earned by a telecom company – including from non-telecom sources such as deposit interests and sale of assets. The companies, however, have been of the view that AGR should comprise the revenues generated from telecom services only and non-telecom revenues should be kept out of it.

 A 'no material relief' scenario would be an industry-structure-altering one, it added.

Even as the massive AGR-case-related payout is a meaty gross negative for Bharti airtel, the potential gross positive from industry consolidation will likely result in a net positive outcome, it said adding that Bharti could be a net beneficiary.

Credit Suisse noted that Vodafone's idea faced "another operationally weak quarter" and that the government relief measures are "key to sustain". Meanwhile, the Indian telecom industry scenario of heavy losses continue day after details of. 

Losses incurred by Reliance communications in the second quarter of 2019-2020 were made public, reliance communications on Saturday said Anil Dhirubhai Ambani resigned as the company's director. Along with him, four other senior officials of reliance communications have also stepped down from their posts. These are Chhaya Virani, Ryna Karani, Manjari Kacker and Suresh Rangachar.

In the second quarter of 2019-20, reliance communications' consolidated loss stood at Rs 30,142 crore. This data was released on Friday.