Opinion
Mint Quick Edit | Relief for telecom operators is good for the Indian market
Summary
- The government has dropped its bank guarantee requirement for an earlier set of spectrum auctions. This is good for market competition. Telecom needs to be freed from golden-goose treatment.
The government has reportedly waived the requirement of about ₹33,000 crore worth of cumulative bank guarantees that private telecom players needed to provide against spectrum auctioned before the 2021 reform package.
With advance proof of finance arrangements no longer needed, telecom operators will only have to pay for spectrum on the scheduled dates.
Also read: Mint Quick Edit | Do bells and whistles work in telecom?
This will let them breathe easier, especially Vodafone Idea, which owed ₹24,800 crore or three-fourths of the total.
The lightened burden could enable it to get capital more easily and invest in 5G services, where other players had rushed ahead while it struggled financially.
If the government’s move helps turn the market more competitive, it would serve the cause of consumers.
Also read: Mint Explainer: Does India's telecom sector need more reforms?
What will also help is a rethink of revenue maximization as the prime objective of spectrum auctions.
If pressure to secure this limited resource results in excessively expensive bids, the whole sector ends up suffering from the “winner’s curse" even if it fills government coffers.
But telecom is an industry on which many others depend in today’s internet era.
Its interests must never be taken lightly and sufficient rivalry must prevail.
Also read: India has a chance to shape global telecom standards
