Trai issues show cause notices to Hutch companies

Mumbai, Jan 25 | Updated: Jan 26 2005, 05:30am hrs
Telecom Regulatory Authority of India (Trai) has issued show cause notices to two telecom companies of the Hutchison group, namely BPL and Shyam Telelink Ltd, and also to a few value added service providers for defaulting in submitting separate audited accounts to it by December 31, 2004. In a press release, Trai has asked the defaulting companies to explain by January 28, as to why action should not be taken against them.

As per the regulation, service providers whose accounting year ended on March 31 2004, were required to submit their audited accounting separation reports to the authority by December 31 2004, said the release. It added that all the vertically integrated players including BSNL, Bharti, Reliance and Tata have submitted to the authority. These reports include segregated cost records for various products and services provided by these companies, said the release.

The reporting system on account separation 2004 was issued by Trai with the main objectives of identifying cross-subsidisation practices, investigating cases of predatory pricing and other anti-competitive practices. Hutch officials said they would have to see the notification before commenting. Meanwhile, the Cellular Operators Association of India (COAI) in a letter dated January 6, 2005 to Trai has requested it to review the matter in the overall interest of the sector and keeping fair competition in mind.

We believe that the accounting separation information required by Trai is too detailed and comprehensive, the letter stated. Adding that this information could be extremely business-sensitive, operators are apprehnsive about releasing such information.

COAI has suggested three alternatives for Trais consideration: service providers to compile the information required and furnish an affidavit to that effect to Trai by the prescribed date; the information will remain with service providers, though the authority can ask for specific bits of information; and finally, if the service providers fail to comply with the requirements, it could invite penal action from Trai.