In a veiled attack on sector regulator Telecom Regulatory Authority of India as well Mukesh Ambani’s Reliance Jio Infocomm, Bharti Airtel on Tuesday said while consolidation is generally good, a forced consolidation because of one player being offered unfair advantage is bad for the sector and for the government’s revenues.
Bharti Airtel’s CEO for India and South Asia, Gopal Vittal, while welcoming the announcement made by Vodafone and Idea a day ago of a potential merger said, “We welcome the news of the proposed alliance between Vodafone and Idea Cellular. Consolidation is always good, especially for any capital intensive sector with multiple players.”
Vittal added, “However, it is important to ensure that such consolidations are not an outcome of a forced situation created by offering an ‘unfair playing field’ to any particular company while completely destroying the viability of the others. That would be an unfavourable situation, which is not only bad for the sector, customers and the employees, but will also adversely impact the overall investment climate and above all revenues to Government.”
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Implicit in Vittal’s comment is that had Trai not been a mute spectator to Jio’s free services offer, which the company views as a gross violation of all laid-down regulatory norms, Vodafone and Idea would not have explored the merger option at this stage.
Bharti is already in the Telecom Disputes Settlement and Appellate Tribunal where it has alleged that Trai has turned a blind eye towards regulatory violations by Jio. The next date of hearing is on February 1.
The basic charge of Bharti’s against Trai is that as per the regulatory orders in force, there can be no such thing as free voice call as the interconnect usage charge (IUC) acts as a floor for retail tariff. Further, the promotional plan offered by any operator can only be for a period of 90 days, which Jio has violated and Trai has failed to pass any directions against it.
Interestingly, Idea Cellular has also followed Bharti to TDSAT with the same complaint, and its petition will be heard jointly with Bharti’s.
If the Vodafone-Idea merger materialises, its total revenue at over Rs 80,000 crore, while being less than the consolidated revenue of Bharti’s at Rs 96,532 crore (FY16), will be higher if only Bharti’s India operations revenue of Rs 70,843 crore is taken into account. In terms of revenue market share the two will beat Bharti to emerge with a share of 43% against the former’s 33%.
The merged entity would also get a major leg up in its 3G and 4G spectrum holding, thus offering major competition to Bharti and Jio.