Goods and services tax which got implemented from July 1st seems to have taken a lot of margin from the telecom companies, in spite of earlier accidents occurred with the Reliance Jio which have taken a large chunk of profits out of the earlier established telecom firms.
The marginal loss is a product of extra 3 percent of tax hike applied after the GST implementation. And to be accurate, the telecom companies cant even further translate this price hike to the customers as the major portion of revenues are generated through the prepaid subscribers, and in this current situation of the competitive environment, it is not worthy to ask for any price hike.
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The analyst and market expert shave calculated that the profits have been stuck around 2 percentage point after the coming of the GST. While talking about the profit margins of IUC, there is an approximate 200 basis points and above. Till June 2017, both the Bharti Airtel Ltd and Idea Cellular Ltd have suffered a lower 8.3 and 9.6 percentage points respectively along with the continues strick from the Reliance JIO as well.
It is to see that by the year-end, along with the impact of GST and IUC the margins of both of these will have been dropped by 12.5 and 14 percentage points respectively basically when the reliance Jio started its service offerings.
