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Telcos meet IMG, accuse Jio of predatory pricing

Incumbent telecom operators on Friday refuted Reliance Jio's claims on investments and debt

Kiran Rathee & Press Trust of India  |  New Delhi 

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Refuting claims by Reliance Jio, incumbent telecom operators on Friday stressed before an inter-ministerial panel that they were making massive investments in infrastructure.

Bharti Airtel, Vodafone, and shared data with the panel regarding investments and debt raised. The panel was formed to resolve financial stress in the sector, which has debts of around Rs 4.5 lakh crore. 

The companies said had adopted a predatory pricing approach to win market share. 

They said started testing in December 2015 and by September 2016 it had acquired over 6.5 million customers through private distribution of SIM cards. launched its services on September 5, 2016, and acquired more than 120 million customers. Even after 10 months of launch, a majority of Jio’s customers are being served for free. Jio, owned by Mukesh Ambani, had earlier told the panel that the stress had been created by the operators themselves because they did not invest in equity or in new technology.

The incumbents said the call connect charges of 14 paise/minute is below cost and needs to be corrected.

Airtel said it had made a capital expenditure of Rs 1.25 lakh crore in 2012-17, of which Rs 46,000 crore was raised as debt and Rs 79,000 crore of equity was infused from operating cash flows. It also said operators should have the "right to retain customers" through offers. 

Idea said since 2013-14, it had made a investment of Rs 77,127 crore, of which Rs 38,484 crore was through debt and Rs 38,643 crore through equity and internal accruals. It suggested imposition of floor rate for tariffs to check predatory pricing. 

The incumbents said the industry’s revenue had declined more than 20 per cent over the last three quarters. They added the government had suffered an annualised loss of Rs 10,000 crore due to dropping revenue.

Airtel said its investments and capex, excluding spectrum, had reached an all-time high of Rs 14,497 crore, which was 23.3 per cent of it gross revenue for 2016-17. By comparison, global operators have capex of 13-14 per cent of revenue. 

To improve profitability, the operators sought interconnect charges on a “full cost” basis. and Reliance Communications have demanded these charges be brought down to zero.

The incumbents also refuted claims that spectrum price had increased due to deferred payment liability. They said the price of spectrum in the 900 MHz band had increased in 2015 because of aggressive bidding by the new operator. 

  • Say call connect charges of 14 paise/minute is below cost and needs to be corrected
  • Demand that operators be paid more for calls terminating on their networks
  • Other demands include setting a floor price for voice and data services, reduction in levies, a reduced GST rate