As Reliance Jio impact bites, telcos CEOs meet minister Manoj Sinha; get reassured on orderly growth for sector

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Published: June 23, 2017 6:28:34 AM

Telecom minister Manoj Sinha on Thursday assured the telecom industry bigwigs that the government would take corrective steps to ensure orderly growth in the sector.

Manoj Sinha, Reliance Jio, Telecom minister, Idea Cellular, IMG, Gopal Vittal,  Bharti Group, Aruna Sundarajan, Reliance Communications, Anil AmbaniCommunications Minister Manoj Sinha. (Express Photo)

Telecom minister Manoj Sinha on Thursday assured the telecom industry bigwigs that the government would take corrective steps to ensure orderly growth in the sector. “The report of the inter-ministerial group (IMG) will come soon… Corrective steps will be taken by the government for ensuring orderly growth in this sector in terms of services to the common man,” Sinha said after a two-hour meeting with promoters and senior executives of telecom firms.

Sinha’s assurance came after the operators stressed on the points they had earlier made at their meetings with the IMG, which underlined the division between the incumbents like Bharti Airtel and Idea Cellular on one side and Reliance Jio on the other. The incumbents highlighted that the government should immediately look at fixing the termination rates, which would fix the issue of predatory pricing that has been affecting the sector since Q3FY17. They said termination charges should be raised from the current 14 paise per minute to reflect the full cost, which is around 30-35 paise, since networks are not created to service others. This was a pointer to asymmetric call traffic from Jio’s network — 92% outgoing and only 8% incoming.

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They also urged for increasing the moratorium on spectrum payment as well as the tenure of instalments. Jio, on its part, strongly batted for zero termination rates while stressing that there was no stress in the sector and even if there was some stress, it was because the incumbents have grown more through debt rather than equity.

It said that some dip in revenues takes place whenever a new operator enters, as it happened in 2002-03 and 2008. It even favoured the removal of deferred payments for spectrum since it led to irrational bidding, leading to fuelling growth through debt. Jio’s contention was that incumbents should sell stakes to infuse more equity and invest in new technologies like LTE networks to provide free voice calls at no cost.

All operators agreed that licence fee and spectrum usage charges should be lowered as part of rationalisation to reflect only administrative cost since spectrum is now acquired through auctions.
Thursday’s meeting rounded up a series of meetings individual operators had with the IMG last week along with the senior officials of the Telecom Regulatory Authority of India. Apart from Sunil Mittal, chairman of Bharti Group, and Gopal Vittal, CEO and MD of Bharti Airtel; Himanshu Kapania, MD of Idea Cellular; Mahendra Nahata, board member of Reliance Jio; and Ishaat Hussain, director, Tata Sons, the meeting was also attended by representatives of State Bank of India, officials from the department of financial services in the finance ministry and telecom secretary Aruna Sundarajan. Reliance Communications chairman Anil Ambani met the minister but did not join the meeting.

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