Recently, The Telecom Industry in India has been affected as all giant Telcos havent paid their AGR dues!
Telecom Regulatory Authority of India (TRAI) has been planning to fix floor prices for a long time now as the telecom industry is facing substantial financial crisis because of massive AGR dues from the telco.
Reliance Jio addressed TRAI and suggested that increase in floor prices must be done in a slow pace and fixed at Rs 15 per GB which must eventually increase to Rs 20 per GB after a period of six to nine months.
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Is Jio’s Price Hike Actually a Smart Move for the Telecom Industry?
As per the sources of ET Telecom, Jio has marked that wireless data rates will depend upon the data consumption growth by consumers. Reliance Jio also stated that voice tariff must continue under forbearance as earlier as it will disrupt the market functioning and will be challenging to implement.
As per their statement on the consultation paper of Trai on “Tariff issues in Telecom services”, Jio said that Indian customers are highly price sensitive. In order to increase the floor prices, the target floor price must be rolled out in 2 to 3 tranches as it will minimise the burden of the increased tariff.
Mukesh Ambani, who is the chairman and largest shareholder of Reliance Industries, stated that targeted data floor price must cover all the mixed tariffs with clearly defined elements. Jio also highlighted that the target floor price must be rolled out gradually in all the existing tariffs and applicable segments including private and corporate accounts.
Companies have been left scrambling to pay dues after the Supreme Court on February 14 pulled them up for failing to comply with its October verdict. Telcos such as Vodafone Idea and Bharti Airtel have to pay a massive amount of AGR dues of Rs 53,000 crore and Rs 35,000 crore respectively.
The Importance of Minimum Floor Price for Using Mobile Services?
The Cellular Operators Association of India (COAI) has urged the government to ensure that consumers pay a minimum floor price for using mobile services from April. It has also urged licence fee and spectrum usage charges be brought down to alleviate financial stress in the sector.
COAI said in a letter dated 26 February, “Floor pricing is imperative to ensure the sector is sustainable, and in a position to bear the deferred spectrum and adjusted gross revenue dues, while continuing to invest in world class networks and services.”
Additionally COAI said, “With the recent AGR judgement, the situation has become even more critical. The industry therefore requests support from the government to take steps to make the telecom sector sustainable”.
However, Reliance Jio stated that once a target floor price is fixed, it will be a vital element in the telecom industry, and it will act as an aid in the distressed sector. Also, a fixed floor price will slowly remove the financial burden from the telco giants and will ensure their viability in the market as they are facing massive cash crunched situation without any interim relief measures from the government.
COAI’s letter comes just a day after Vodafone Idea sought the same sops from the government. It also comes a day before the Digital Communications Commission, which has representatives from DoT, ministry of finance, ministry of electronics and information technology and NITI Aayog, will meet on Friday following a series of meetings between Vodafone Idea chairman Kumar Mangalam Birla and top government officials.
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