“The demand (of floor tariff) remains unanswered,” Cellular Operators Association of India (COAI) director general SP Kochhar told ET. “It should be looked at with a greater amount of depth due to the prevailing environment.”
The group, which represents Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea, said all three telcos were unanimous in their call for such a limit. “Our demand on floor tariffs emanates from the financial health of the sector and, to make it viable, there is a requirement of laying down the floor tariff,” Kochhar said.
This is among the most contentious issues that Vaghela will need to decide on, having recently taken over as Trai chairman after the five-year tenure of RS Sharma, which was marked by several disputes.
Consumer Rights at Stake
Speaking to ET recently, Vaghela had declined to comment on the issue as he seeks to balance the rights of consumers and industry concerns. All three non-state telcos have been pushing for a floor price to improve the health of the sector, nudging a reluctant Trai to issue a consultation paper in December 2019. The regulator is said to be against fixing a floor mainly because it’s regarded as anti-consumer and hasn’t taken any further steps, such as holding open-house discussions, even months after the operators submitted their views. This has led some to believe that the issue has been put on the backburner.
Regarding the reported view about such a move being anti-consumer, Kochhar said, “We have been hearing what you are saying, but that had never come to us officially.”
Vodafone Idea and Bharti Airtel, both loss-making, have been especially vocal about the need for a floor. They say the average revenue per user (ARPU) needs to improve to 200 in the short term, and then to 300. Vodafone Idea’s ARPU in the quarter ended June 30 was 114 while that of Airtel was 157. Jio, the only profitable carrier, posted 140 ARPU.
Vodafone Idea and Bharti Airtel — which had raised rates along with Jio by up to 40% last December — are hesitant about raising rates again without such a floor as they’re unsure if their Mukesh Ambani-owned rival will follow suit. Bharti Airtel and Vodafone Idea have to pay 26,000 crore and 50,000 crore, respectively, in adjusted gross revenue (AGR) dues over 10 years, until March 2031.
“The AGR issue is now settled from the court, so the health has suffered. And therefore, this demand is a legitimate demand that should be looked at by Trai,” Kochhar said.