1. Call drops: Industry body says 3 telecom companies invested Rs 2.25 lakh cr in infrastructure

Call drops: Industry body says 3 telecom companies invested Rs 2.25 lakh cr in infrastructure

Vodafone’s debt as of September last year is Rs 76,800 crore and that of Reliance Jio is Rs 36,780 crore as on March 2015.

By: | New Delhi | Updated: May 4, 2016 8:12 AM
According to telecom companies, they have rolled out more than two lakh sites in the last 15 months and a new site is being put up every three minutes. (Reuters)

According to telecom companies, they have rolled out more than two lakh sites in the last 15 months and a new site is being put up every three minutes. (Reuters)

Refuting Trai’s allegations that lack of investment by telecom firms in network infrastructure appears to be the main reason for call drops in the country, industry bodies on Tuesday told the Supreme Court that the top three operators have invested over Rs 2.25 lakh crore in infrastructure investment in the last five years and the investments have been increasing every year.

While India has the lowest voice rates in the world, the telecom industry contributes 6.1% to the country’s GDP and is the second largest private sector having infrastructure investment of Rs 8 lakh crore despite just getting 1% return on investment, senior counsel Kapil Sibal, appearing for the COAI, said in his concluding arguments before a bench headed by Justice Kurian Joseph. The bench reserved its judgment in the case.

According to telecom companies, they have rolled out more than two lakh sites in the last 15 months and a new site is being put up every three minutes. The number of sites put up in last 15 months is nearly equal to the number put up in the last 20 years, they added.

The two industry bodies have challenged the Trai’s October 16 tariff order that mandated them to pay subscribers Rs 1 for every call drop they experience on their network, subject to a cap of three call drops a day, starting from January 1, 2016. The Delhi High Court had upheld the penalty order on February 29.

COAI further told the court that the net debt of service providers have increased immensely.

While the net debt of Bharti Airtel has swelled to Rs 90,570 crore as on December 31, 2015 from Rs 58,357 crore in March 2013, the net debt of Reliance Communication and Idea Cellular till December last year is Rs 43,646 crore and Rs 38,372 crore, respectively. Vodafone’s debt as of September last year is Rs 76,800 crore and that of Reliance Jio is Rs 36,780 crore as on March 2015.

Sibal further told the judges that there has been 300% increase in capital investments in the country with Bharti Airtel having made the highest investment at Rs 81,528 crore followed by Vodafone and Idea at Rs 78,555 crore and Rs 65,019 crore, respectively.

Stating that Trai has excluded spectrum from infra investment, Sibal argued that the investment by telcos has multiplied 22% times in the last four years.

“Spectrum investment has increased significantly. While in 2010, spectrum constituted about 10% of our gross investment, today despite higher level of investment in equipment and spectrum constitutes over 45% of our gross investment in fixed assets,” the senior counsel said, adding that telcos were yet to recover the cost of capital in the last 20 years.

According to COAI, Trai claims that there is plenty of spectrum is correct, but the fact remains that spectrum remains unsold as its phenomenally expensive in India.

The expensive spectrum takes away the largest chunk of investment (Rs 172,000 crores as on March 2016 or over 45% of fixed assets) and thus limits the investment networks, he added.

“The steps taken by Trai can only inflict additional cost on the industry and further impair their ability to invest in infrastructure, as most of the service providers have either already reached limits of leveraging or will do so after the upcoming auction.”

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