Widely read:
Tolstoy said, "Happy families are all alike; every unhappy family is unhappy in its own way." The telecom sector has been one of the unhappiest sectors for years. Be it intense competition or government regulation, telecom companies have proved to be one of the biggest wealth destroyers. The launch of Reliance Jio has added to their pain. And it's not just because of the fate of the sector that they are suffering; they have their own self-inflicted wounds to lick. Take a look at their current woes.
Bharti Airtel: Bharti Airtel acquired Zain Telecom's Africa operations in 2010 for a whopping $10.7 billion and has invested another $5 billion since then. It is yet to report any profit from its Africa operations.
Vodafone: Vodafone entered India in 2007 by acquiring Hutch for $11.1 billion. It has so far invested another $9 billion. Recently, it wrote $6.86 billion off its Indian assets. This is on top of $3.33 billion in 2010. The company is also facing tax issues running into billions of dollars.
Reliance Jio: The company made a big-bang entry into the Indian telecom industry in September 2016. It has promised free voice calling for life, which is the bread and butter of the Indian telecom sector. Its 4G data services are also free of charge until March 2016. Jio has made a huge investment of `2.5 lakh crore and is facing questions regarding whether it will be able to generate decent returns amidst increasing competition and price cuts.
Reliance Communications: The company is carefully moving ahead. It has announced a merger with Aircel and become one of the largest telecom players in India. It has sold its tower assets to Brookfield to reduce debt and announced a virtual merger with Reliance Jio. But debt levels remain high.
Idea Cellular: The best-performing telecom company in India for the last five years, Idea is facing an uncertain future as it lacks the crucial 4G spectrum and has huge debt. Analysts are questioning whether it will be able to compete. It is a prime candidate for a merger or an acquisition.
Tata Teleservices: The company had an agreement with NTT Docomo to buy back Docomo's stake at a predetermined price. Now when Docomo wants to exit Tata Tele, Indian laws are stopping Tata Tele from buying back Docomo's stake at a predetermined price. Unless this issue is resolved, it is unlikely that the company's fortunes will improve.
MTNL: Being government-owned, MTNL has serious efficiency issues. It lacks sufficient spectrum. It is also dependent on the government for its funding.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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