Indian operators continue to push for tariff rises

Indian operators continue to push for tariff rises

Now Indian banks are getting involved in the ongoing pricing and debt issues afflicting operators in the country. In particular, suggestions that there should be a hefty raise in mobile tariffs seem to have worried the Reserve Bank of India.

One operator, Vodafone Idea, has said, according to Indian press reports, that it wants a seven-to-eight times rise in mobile data tariffs, along with much higher call charges. This, it feels, would help to offset the massive debts the Department of Telecommunications (DoT) has said it owes, supported by the Supreme Court’s judgement on unpaid Adjusted Gross Revenue (AGR) dues.

The Central Bank is worried that such rises might be inflationary, though it is also concerned about the effect on the banking sector of the AGR orders; Indian banks have lent heavily to the telecom sector. RBI has reportedly written to the government asking that telecom companies be allowed to stagger their payment of AGR dues.

But speedy government intervention on floor prices is not likely. RS Sharma, chairman of the Telecom Regulatory Authority of India (TRAI), has been quoted as saying that TRAI did not see a need to speed up the consultation process on the need for a floor for tariffs. However, telecommunications companies could fix a floor if they wished, said Sharma. Operators are keen for the government to set a floor for tariffs by 1 April. Indian ARPU is among the lowest in the world and, some would argue, not sustainable.

Meanwhile, Bharti Airtel has recently paid the DoT a large chunk of its statutory dues, bringing the total amount paid by the operator to the government to about $2.47 billion, just over half the moneys owed in all. Reliance Jio has paid the entirely of its, much smaller, amount, and Vodafone Idea has so far paid about $481 million of the $7.8 billion that the DoT says it owes.

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