Union communications minister Jyotiraditya Scindia said Indian telecom operators are among the healthiest globally, with the sector continuing to grow steadily. He added that the government is evaluating the next phase of the PLI scheme for telecom equipment.
The Centre is not looking to exit or dilute its 49% equity stake in telecom operator Vodafone Idea Ltd, according to Union Communications Minister Jyotiraditya Scindia.
The government is discussing the next leg of the telecom production-linked incentive (PLI) scheme, he said in an interview with Mint.
The minister noted that the country’s telecom market is consistently growing and delivering greater value than other global markets.
Edited excerpts:
Are there discussions on whether the government would want to exit Vodafone Idea?
I have been very clear on this. As far as Vodafone Idea is concerned, the government is a 49% equity stakeholder. We do not envisage raising our equity stake at all beyond that 49% share. We are not aware, and we have had no discussions on exiting or diluting our equity stake at this point in time.
Is the government helping Vodafone Idea bring on a new investor?
The government is an equity holder in Vodafone Idea. The company had asked for a certain relief, which the government has worked on. We have protected our cash flows and what is due to us. We have extended it over a longer period, and that is where our responsibility ends. It is not the business of the Department of Telecommunications (DoT) to interfere with the management of a company in which it is merely a shareholder. We are not managing Vodafone Idea, and therefore that’s not our intent.
Bharti Airtel has also been awaiting a similar relief from the government. Your thoughts?
As far as Airtel is concerned, this order with regard to a certain particular player, namely Vodafone Idea, was passed by the Supreme Court. There is a prior Supreme Court order, which stands vis-a-vis all TSPs (telecom service providers). This order (recent one) made a special case for Vodafone Idea based on the rationale that the Supreme Court deemed fit. The DoT has taken action based on the Supreme Court order. There is no such directive to us vis-à-vis any other TSP.
But will Airtel need a formal response from the DoT if they want to move the court?
No… We are governed by what the SC has issued. The SC has only given us an exception in this case.
The telecom PLI scheme has seen over ₹1 trillion in sales, but the incentive disbursements have been low. What is the reason for this?
The government disburses funds for the last fiscal year. The sales (of telecom gear) for up till 2024-25 have been ₹80,000 crore. If you take an average of, let’s say, 4% disbursements on ₹80,000 crore, you are talking about ₹3,000 crore on it. The way companies work is that they submit the requirements for disbursement based on their sales by December of next year or sometimes also by March. Today, we have already disbursed, as of December, about ₹2,200 crore. By March, we will have disbursed about ₹2700-2,800 crore. It is pretty much matching up to what we actually hoped.
Is there a plan to extend the telecom PLI scheme?
We certainly want to continue encouraging the sector, because much of the economic growth is actually being driven by this highway. Therefore, to proliferate it and both deepen and widen it, it is extremely important. We are cogitating over it at this point in time. It is too early to comment, but I certainly would try and want to make sure that we have a second follow-on.
What changes do you think should be made in the next leg of the PLI scheme?
Every scheme evolves, and the first is to really get in. The second would be to get companies to come in and invest and to produce here so that the economic process starts. In the next step, I would hope that the companies would do a greater degree of value addition as their confidence in my country and in my processes and my human resources increases. Third, ideally, I would want the companies to come to India and even design, which is why we already put in a 1% incentive. It happens in stages.
We are looking at spectrum auctions again this year. How do you look at the health of the industry, and do you think there’s sufficient appetite?
Indian telcos are probably the healthiest across the world. It is the only telecom market that is consistently growing. It is the only telecom market that is delivering greater value, and it is the only telecom market in the world where such a large amount of capex is being done by the players. Therefore, I only see two things happening in the telco space—one is the widening of the market from a geographical point of view, and the second is the deepening of the market from a density point of view. That is driven by two factors. First, if you get more people on board. Today we already have 1.2 billion customers out of a population of 1.4 billion. There are many in those 1.2 billion who own multiple numbers. The second is the intensity of engagement per customer, and today there is 32GB per month in terms of data usage, which is again one of the highest in the world.
The Prime Minister’s Office (PMO) has asked the DoT to study whether data usage can be taxed. What are your views?
It is way too premature to even comment on something like this.
Do you think the West Asia crisis will affect the sector, given that tower companies have expressed concerns about the LPG shortage?
It is business as usual—absolutely no impact and no worry.
