Will others be able to live with Jio?

" 'Mommy, Ambani broke my business!' Or was it something else Mr Mittal, Mr Birla?" asked Andy Mukherjee sarcastically. He is talking about India's telecom companies which have been hit by the entry of Reliance Jio, which is offering free voice calls with free roaming throughout India with its data package costing Rs 303, less than $5, per month. Why is it a problem? Because, nearly 50% of revenues of telecom operators in India depended on voice calls and messaging. The sudden attack by Reliance Jio on this lucrative source of revenue has hit companies very hard. Partly, it is because of government policy. All resources in India belong to politicians and not to the people. So companies have to pay huge sums of money for spectrum and then have to pay a portion of gross revenue as additional license fees. On top of that we have to pay a service tax, which will go up to 18% under GST, on our phone bills. Business tycoons in India never risk their own money in the companies they control. Instead they borrow from banks. Bharti Airtel has raised 33 times more money from debt than through equity, which means huge interest outgo. Reliance Jio has 6 times more equity than debt, which would allow them defer dividend payments until they make profits. Reliance Communications has already defaulted on its debt payments, its stock price has collapsed by 40% and its junk-rated foreign debt is fetching 70 cents to the dollar. About 20% of loans at public sector banks in India have gone sour. Bad loans at some banks equal 75.53% of their net worth, in some banks bad loans exceed their net worth, wrote T Bandopadhyay. Banks have warned the government of the risk of default on loans to the telecom sector. That is why the government will do anything to stop RCom from going bankrupt, thinks Mukherjee. However, telecom companies are not entirely blameless. The telecom regulator asked companies to make all mobile numbers portable throughout India in 2009, which meant that users would not have to pay roaming charges. Companies were unwilling to give up such a lucrative source of revenue so after a lot of struggle they introduced their own interpretation of the order. People could change from one service provider to another locally but roaming charges were to continue. This is because India was divided into 22 circles and they had to pay for each circle separately. Vodafone and Idea have merged, but, in reality, Vodafone is selling out. In desperation the existing companies are accusing Reliance Jio of predatory pricing and are asking the regulator to fix a base rate for consumer charges. 'Jio' means 'to live'. Will Jio allow other companies to live?