India Is the Best Place in the World to Have a Smartphone but That’s About to Change

India Is the Best Place in the World to Have a Smartphone but That's About to Change

The precarious financial health of Indian telecom players came into sharp focus last week

Highlights
  • Telecom industry is at crossroads in India
  • Airtel, Vodafone, Jio announced their plans to raise tariffs
  • Jio’s cut-rate plans were a hit

For cellphone users, India is a kind of wonderland where data is plentiful and very, very cheap. Over the past three years, mobile plans at rock-bottom prices – voice calls and 25 gigabytes of data for $3 a month, anyone? – have attracted tens of millions of new subscribers and jump-started the country’s digital revolution. There’s only one problem: the low prices have nearly driven several major telecom companies out of business.

The precarious financial health of Indian telecom players came into sharp focus last week when two cellular providers announced disastrous quarterly results. Vodafone Idea and Bharti Airtel revealed record losses of $7 billion (roughly Rs. 50,255 crores) and $3 billion (roughly Rs. 21,538 crores), respectively, for the three months ending in September. Both companies warned that their ability to continue was in jeopardy.

Now the telecom industry is at a crossroads. Alarmed by the state of the business, Cabinet approved a small bailout of sorts on Thursday by postponing certain payments that the telecom companies owe to the government. But it is also clear that Indians are going to have to pay more for the data they have grown to love.

India has the world’s cheapest mobile data prices. A gigabyte costs just 26 cents, compared with more than $12 in the United States, according to a recent report from a consumer research firm. But India’s prices are “simply not financially viable anymore,” said Rajan Mathews, director general of the Cellular Operators Association of India, a trade group.