Indian telecom operators are bleeding up revenue due to the back-to-back free promotional offers from the new entrant in Indian telecom space, Reliance Jio. With Airtel’s net profit dropping more than half and Idea Cellular posting loss for the first time ever. Well, the free offer seems to be affecting the government revenue from the telecom sector. According to the highest decision-making body in the Department of Telecommunications (DoT), the Telecom Commission (TC), Reliance Jio’s free voice and data offer have cost government around 685 crores. It has affected government finances in the third quarter of this financial year.

Telecom Commission has held India’s telecom watchdog Telecom Regulatory Authority of India (TRAI) for disrupting the health of the telecom sector. It asked the regulator to implement its decision of June 2002 and September 2008 regarding promotional tariff.

TRAI has earlier allowed Jio to freely continue its promotional offers beyond the stipulated time. Usually, a promotional scheme from a telecom operator is restricted to run only for 90 days. Also, the telcos must disclose details of promotional offers, which in any case shouldn’t exceed 90 days.

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The Telecom Commission is expected to issue a note to TRAI, reminding the regulator that its inability to implement its own orders could jeopardise the banking sector, deferred spectrum payments to the government and orderly growth of the telecom sector, according to a document reviewed by The Economic Times. “It is expected the revenues will further decline by 8-10 percent, as per market expectations”, the commission noted. Due to Jio’s free promotional offer, the licence fees and spectrum usage charges collected by the government from operators is expected to drop.

In the case of Reliance Jio, the operator started its operation on 5th September 2016 with ‘Jio Welcome Offer‘. A promotional offer which was valid until 31st December 2016 and that also beyond 90 days. Thus Jio had effectively violated the regulator’s order of 90-day cap on promotional offers. Jio’s free voice and data offer have led other operators to reduce the tariff on voice and data plans. This has further lead to lowering government revenue from the telecom sector.

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