Prior to the arrival of Jio in 2016, the top three telecom companies in India were Airtel, Vodafone, Idea, and BSNL. Today, the companies that were once ranked one through three are losing between 30 and 40 lakh subscribers each month and owe 2,20,000 crores. After using 250 GB of data, 1 GB of data unexpectedly dropped from 250 to 30 rupees because of Jio. Along with making money from Jio, Mukesh Ambani also acquired millions of users from these businesses.I'll tell you whether to own it or not if we reduce it further because of some financial issues. Vodafone and Idea are prepared to compete with Jio, which will merge and suddenly come and take over the telecom industry in India in one blow. How is Airtel still standing in the face of Jio today? While Airtel and Jio are adding a few lakh new customers each month, the majority of Vodafone Idea's current users are coming from the firm that owns approximately 25 crore users, Vodafone and Idea, which had over 40 lakh subscribers in September and more than 30 lakh subscribers in October, and this trend is currently continuing.
Jio believes that to be the cause of the bankruptcy predicament. If you truly believe so, you are incorrect because Vodafone Idea made some poor business decisions that led to this company's current precarious state. Following India's economic reforms in 1991, the telecom sector was also made available to private enterprises for commercial operations; nevertheless, at that time, the country's telecom license fees were extremely exorbitant. Spectrum refers to the area from which a signal for our phone originates. The company with more coverage and a stronger signal will be the one that purchases more range. This spectrum is owned by the government of India, and private enterprises purchase it when it is put up for auction.Since no private company was willing to purchase it in 1999 due to the exorbitant pricing in India, the government introduced a new revenue sharing model, which allows private enterprises to operate without having to pay the government anything up front and only pay a portion of their annual gross revenue.
They also have the means to have to pay the government an annual license fee equal to a portion of their income. Many private enterprises have launched their businesses by stealing the government as a starting point as a result of this new arrangement. The two biggest businesses are Idea and Vodafone. This miscommunication. occurred Government regulations regarding annual gross revenue state that income from both services and non-services rendered by a telecommunications business is included; yet, private companies were only considering telecom services. The Cellular Operation Association of India filed a lawsuit in 2005, and in 2019, the court made a decision that favored the government.According to ATR news, all telecom companies must pay the government a spectrum license price of 165,000 crores for the 20-year period between 1999 and 2019. Of them, only Vodafone and Idea have more than 60 thousand crores. Even yet, the idea company had the potential to succeed even then, but because it was in the Indian telecom sector, it continued to make mistakes until 2015.
Furthermore, they made no efforts to plan ahead, even though 3G, 4G, and 5G all received large sums of money. For additional context, Mukesh Ambani made over 43000 crores in revenue when he sold Facebook Reliance Jio 9.99 in 2020. Banks in India are willing to lend Mukesh Ambani any amount he wants, but he is making money through owning shares in his company because a company with greater debt will be valued less. Rather than losing ownership in Reliance and businesses like Facebook, he will not lose it if Facebook sells less than 10% of his business.Collaboration will grow, and it will also contribute to the funding required for Jio's future expansion. If you notice, the Indian government plans to invest 1,50,000 crores in five genes Pectoral Action in 2022. Mukesh Ambani will contribute 80,000 crores to the project, of which half will go toward 5G spectrum for Jio. Jio is currently valued favorably, and Idea Company was similarly valued favorably in 2014 and 2015, when its shares were trading close to 120 on the Indian stock exchange.
When Idea Company was making strong profits, they didn't take any action to pay off their debts; instead, they focused on growing the business in the future. If Idea had sold some of its shares and then settled it, similar to Airtel today, Idea would have provided Jio with some serious competition. Since it is now impossible to predict whether this business will survive, banks worldwide prefer to lend money to expanding businesses with a high valuation rather than to debt-ridden ones. As a result, Vodafone Idea is unable to modernize its 4G infrastructure and provide a good competition to funds or Jio and Airtel. The Indian government has put out some suggestions for Vodafone Idea in an attempt to keep the company afloat and maintain healthy competition in the telecom sector in India. As per the report, Idea Company's stock market share has stabilized at approximately 10%. However, the Government of India has declared that it will acquire 33% of Idea Company's shares in Vodafone Idea Company, in lieu of the 16 thousand crores Idea Company must pay as interest to the Government.
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