Airtel, Vodafone Demand Minimum Tariff To Avoid Jio Disruption; Will Govt Say Yes?

At the ET Telecom Digital Telco Virtual Summit on September 18, industry experts said that lower taxes and floor price can help restore the debt-ridden telecom companies in India.

Read on to find out more…

Why Are Telecom Companies In Debt?

In February, the Supreme Court had asked all telecom companies to clear their outstanding Adjusted Gross Revenue (AGR) dues. At that time, the telecom companies had to pay a total of Rs 1.47 lakh crore to the Government of India.

Earlier his year, after paying some AGR dues, both companies had appealed to the SC for time to pay the dues.

Now, Vodafone Idea owes Rs 54,754 crore whereas Bharti Airtel has a debt of 25,976 crores. 

On September 1, the SC allowed the telcos to pay their balance AGR dues over the next 10 years instead of the old 20-year schedule suggested by the Department of Telecommunications (DoT). 

An upfront payment of 10% of the dues is expected by the SC by March 31, 2021.

Low Taxes and A Fixed Tariff The Solution To Debt-Ridden Telcos?

As per an ET report, every telco pays Rs 30 for every Rs 100 earned towards telecom taxes.

On the AGR verdict, Vodafone Idea, VI, CEO Ravinder Takkar called for speedy implementation of the National Communications Digital Policy 2018. He also said, “Though this can only happen through a light-touch regulatory approach, along with lower taxation levels for the industry.”

Bharti Infratel Chairman Akhil Gupta suggested setting a floor price as a temporary measure for the financially stressed industry. He said during the virtual event, “A floor price should be fixed at least for the next three to four years. Post that, as things settle down, it can be taken off.”

Gupta pointed out that regulation in pricing has become necessary. He said either each telco has to self-regulate or a regulator has to ensure there is no predatory pricing in this industry.

Gupta also said, “Even when we are down to three private operators, I still see that trend continuing. We all keep saying that the current tariffs and the current average revenue per user (ARPU) are completely unsustainable. But we do not end up increasing the tariffs or thereby increasing the ARPUs.”

Bharti Airtel’s chief executive Gopal Vittal said “The most critical requirement for Digital India is easy and affordable access to the right of way (RoW) so that we can reach customers and give them services they deserve.”