Official, Telecom News, ET Telecom
On Tuesday, the industry lobby group Cellular Operators Association of India (COAI), however, again insisted on the need for a floor price for data services for an interim period of two years to help the industry. to recover financially.
“We are not considering a floor price because this decision may not be favorable to consumers,” an official from the Telecommunications Regulatory Authority of India (Trai) told ET.
The official said Trai would have no differing views on the matter, as he had already rejected the request last year from telecom operators seeking to set a minimum floor price, at least for data services, to support average revenue per user (ARPU) amid intense competition in the market.
But cash-strapped Vodafone Idea unable to raise interest rates due to competition pushed the government to set a floor, saying the move would help restore the industry’s financial health and raise desperately needed funds.
In fact, the company’s latest push came in a June 7 letter that Kumar Mangalam Birla, chairman of the Aditya Birla Group (ABG) wrote to cabinet secretary Rajiv Guba. ABG is a co-promoter of Vodafone Idea which owns 27.66%, while another UK co-promoter Vodafone Group Plc holds 44.39%
In the letter, Birla said that a floor price regime, higher than the cost of service, as well as other steps such as clarity on the liability of Adjusted Gross Income (AGR) and an adequate moratorium on spectrum payments. , were imperative to show the government’s intention to keep three private players in the market.
This demonstration of the government’s “intention” would help build confidence among potential investors to invest in the heavily indebted telecommunications company, he added.
Mobile data rates in India are the lowest in the world, currently standing at around Rs 8 / GB per month.
Supporting Birla’s appeal, SP Kochhar, CEO of COAI said that over the past few years, setting the floor price has become essential to provide the telecommunications industry with some relief from cost and pressure pressures. financial stress.
“Despite these financial constraints, during the pandemic, telecommunications service providers continued to make significant investments and provide seamless network connectivity to Indians. It is important to understand that telecom operators have suffered losses due to the downward trend in data rates, ”Kochhar said.
He added that revenue generation was now essential to maintain operators’ financial health and relieve cost pressures, and stressed that Trai had also conducted a consultation on the matter.
Regulators, however, say it is best if tariffs are subject to forbearance and carriers themselves should increase their prices, as they have done in recent weeks. Over the past few weeks, Airtel and Vodafone Idea have changed their postpaid and core business pricing plans to push users to higher paid plans, with the goal of strengthening their ARPUs.
Jio’s disruptive telecommunications foray in September 2016 on the backs of freebies sparked intense competition with incumbents forced to cut prices to match the newcomer.