telecom towers

Representative Image.

Vodafone Idea has published its financial results for the quarter ended June 2019. The highlights included a 4.3% sequential decline in quarterly revenue and a marginal narrowing of net losses. There also was a focus on increased 4G coverage and speed.

At the same time, however, the release also mentioned that the operator exited around 14,000 low-utilization sites by the end of June 30, 2019.

This amounts to saying that the network footprint of the operator has shrunk by those many sites, notwithstanding the sites that have been added by the operator elsewhere. Industry watchers say that the shutdowns are mostly in those rural areas where the ARPUs have been abysmally low and where the potential for a rise is effectively nil.

These shutdowns are not confined to Vodafone Idea only but instead are a wider industry phenomenon. Understandably, due to severe financial and competitive pressures, the industry is finding it hard to stay economically viable in these areas.

Also, given the existing market and policy dynamics, it would be hard to expect a major reversal of the shift in operators’ focus away from rural areas.

Earlier, the very presence of state-run operator BSNL would have been assuring for subscribers in rural areas. However, even BSNL has appeared to be on an edge in the past recent months.

Telecom stakeholders, including the regulator TRAI and the government, need to review the ongoing developments and explore ways to improve coverage in rural areas. A growing telecom urban-rural divide may turn out to be detrimental to the Digital India dream.

Only a couple of weeks ago, Communications Minister Ravi Shankar Prasad did state in the Lok Sabha that there is a plan to install over 57,500 towers in rural areas during the current financial year.
In that backdrop, the fact that Vodafone Idea shut down 14,000 low-utilization sites, sounds like a contradiction.