If companies cannot make profits why will they bother?

Couple of days back Mukesh Ambani launched a new telecom service in India, called Reliance Jio. Within a few minutes he managed to wipe off Rs 130 billion from the market capitalization of rival firms, Airtel and Idea. How did he do it? By offering unlimited voice calls, including STD service, for free. Telecom firms generated 80% of revenue from voice calls, although this has been falling lately, and Ambani reduced this earning stream to zero in one stroke. In 2009, the telecom regulator, TRAI, issued an order to make mobile phone numbers portable, which meant that a person would be charged the same rates in any part of India. Companies interpreted it to mean keeping the same number while changing from one service provider to another. Why? Because the industry earned Rs 140 billion annually from roaming charges. Since May last year roaming has become free but companies were still earning most of their revenue from voice calls. With so many companies competing for market share in India you would think that one company will start offering free roaming to get more customers and put others at a disadvantage. But that did not happen. Companies, including foreign ones, fought a tenacious battle as a cartel against removal of roaming charges. Why? Because telecom companies in India have incurred a debt of Rs 3.8 trillion and a sudden loss of valuable revenue maybe intolerable. Bharti Airtel made a net profit of Rs 12.90 billion in the fourth quarter of the last financial year. Interest payment on its debt rose to Rs 15.24 billion from Rs 8.58 a year earlier. Bharti's consolidated debt rose from $11.91 billion to $12.66 billion. Why is a telecom company saddled with so much debt? Because the government raises money by auctioning telecom spectrum to distribute as handouts to win elections and for politicians to go to Rio Olympics, with wifey. All resources in India, including land, mines and spectrum belong to politicians and civil servants. Thus, spectrum auction raised Rs 1.062 trillion in 2010, Rs 280 billion in 2012, Rs 612 billion in 2014 and Rs 1.10 trillion in 2015. The worst and most anti-consumer trick was to divide the country into circles and sell each circle separately. It would have been too expensive to bid for all circles so companies levied roaming charges when customers moved to areas where they had to use services of another provider. Having extracted their pound of flesh politicians did not want companies to go bankrupt as banks will be left with huge bad loans and because they will be eliminated at elections if people could not use their mobile phones. So they can do nothing. Enter Reliance Jio and the proverbial dung has hit the fan. Some think that it will be good for all firms as it will expand the customer base. We shall see.