Pricing it right
- IPL spot-fixing case: Net widens, police watching 3 more players, other bookies
- IPL 2013: Imperious Brad Hodge powers Rajasthan Royals to qualifier
- Sonia Gandhi, PM Manmohan Singh slam BJP for disrupting Parliament, stalling bills
- IPL spot-fixing: 'Bookie' Vindoo was close to BCCI chief's son-in-law, say cops
- Jessica Lall case: Shayan Munshi to face perjury trial
It isn't often that markets respond enthusiastically when companies in the services sector raise the price of their products. On Wednesday, however, the stock prices of telecom companies shot up. Especially over the last three years, telecom companies have bled profusely in pursuing a price war. From above Rs 200 in December 2008, the average revenue per user had dipped to near Rs 150 by September 2012. While this was supposed to be made good by the rise in the number of telecom subscribers, and it did rise from about 250 million to 800 million in the same period, the figures have declined since then. Moreover, despite the rise, the gross revenue for the sector, adjusted for inflation, has dipped to about Rs 32,000 crore, from close to Rs 40,000 crore when the undercutting of prices had begun.
Extraneous factors, like the high price of spectrum the government demanded in the 3G auction, have added to the costs. Already weakened by the price war, companies ran up huge debt bills to finance the purchases. Since they did not have the money to finance the expenditure on the subsequent roll-out of services, the costly spectrum won by them is lying unused. So, government policies, aided by a misdirected auditor report, have led to a hoarding of spectrum, making it difficult for new entrants to provide competition in value-added services, and have offered no incentive to maximise the use of spectrum. One of the reasons for companies to shun the auction of the airwaves in November was that few banks were willing to finance them any further.
- Paddy shortfall blamed for mystery death of procurement officer
- 'Bookie' Vindoo was close to BCCI chief’s son-in-law: cops
- Net widens, police watching three more players, new set of bookies
- Suspected Islamists behead soldier on London street
- Malegaon 2006 case: NIA names four right wing terror suspects
- BJP invokes 'sarcasm, ridicule' against PM