COAI asks govt to address issue of companies' fiscal health

Jio's aggressive pricing, govt's revenue losses, banks' over-exposure to sector are key concerns

The Cellular Operators’ Association of India (COAI) has sought steps to address the aggressive pricing strategy of Reliance Jio and the prospect of the government losing out on revenue.
 
The association wanted remedial action before banks stopped lending to the sector.
 
In an interaction with Business Standard, Rajan S Mathews, director-general of the COAI, said domestic banks had 80 per cent of the Rs 4.6 lakh crore exposure to the telecom industry and they were becoming nervous in the current situation.
 
He said the issue raised by Telecom Secretary JS Deepak should be viewed from the perspective of the Telecom Commission and not that of the department of telecommunications (DoT).
 
“He (Deepak) did not write the letter, the Telecom Commission chairman did. The members include the information technology secretary, a secretary-level official from the finance ministry and other government representatives and unless he takes the majority view, the telecom secretary suo motu cannot write a letter to the Trai complaining about the telecom industry,” Mathews said.
 
Unlike Deepak, who had suggested annual auctions for the industry, Mathews said spectrum sales should be conducted once in three years.
 
“We are at a stage where there is no spectrum constraint and consolidation is happening, which means spectrum usage will be more efficient. A three-year cycle between auctions would make sense,” he said.
 
He said the base price of the 700 MHz band should be benchmarked with the reserve price of the 800 MHz band. The 700 MHz band went unsold in the previous auction because of its high base price.
 
Asked who stood to gain more from the Idea Cellular-Vodafone merger, Mathews said it was difficult to say but the ultimate aim was to have a winning entity.
 
The merger could not be termed as a slow exit by Vodafone, as hinted by some analysts, he added. “If Vodafone wanted to exit it would have found a quicker way,” Mathews said.
 
It was more of a financial positioning for Vodafone as it had invested $ 25 billion and had not seen a dime come back to the stockholders, he added.  
 
The COAI has written to the TRAI and DoT seeking intervention in the problem with 4G-enabled, dual-SIM smartphones using MediaTek’s chipset. It has asked the government to phase out devices with 2G SIM slots in six months.