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Trai’s decisions over past two years have hurt all barring Jio: Vodafone CEO

Nick Read's statement adds to the acrimony between older carriers and Mukesh Ambani's Jio.

, ET Bureau|
Updated: Feb 26, 2019, 08.46 AM IST
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Vodafone’s top executive appeared to be alluding to a clutch of contentious regulations issued by Trai over the past two years.
Barcelona: Vodafone Group CEO Nick Read sought a level playing field in India, pointing out that the outcomes of the telecom regulator’s decisions over the past two years have hurt all carriers, except Reliance Jio Infocomm, adding to the acrimony between the country’s older carriers on one side, and the regulator and the Mukesh Ambani-owned telco on the other.

“I think it’s fair to say that for the last two years, we’ve had many regulatory outcomes that have worked against everyone in the market, except Jio, and we only ask for a level playing field in terms of regulation,” Read said, on the sidelines of the Mobile World Congress on Monday.

Vodafone’s top executive appeared to be alluding to a clutch of contentious regulations issued by the Telecom Regulatory Authority of India (Trai) over the past two years.
Trai and the new entrant though have rejected all such allegations.

Some of the controversial decisions and regulations include a 57% cut in interconnect usage charge (IUC) to 6 paise a minute that had hurt revenue of older incumbents, while lowering costs for Jio. Then, the regulator’s recommendation to slap penalties of Rs 3,050 crore on Bharti Airtel, Vodafone India and Idea Cellular for allegedly denying adequate points of interconnect (PoIs) to Jio, has been challenged by Vodafone in court.

Then, a Trai order that changed the rules to identify predatory pricing, and also mandated reporting of all segmented offers, was decried by older telcos as one which would stymie their competitiveness against Jio. Late last year, the telecom tribunal junked the order.

Vodafone’s Read said telecom sector pricing in India remained “artificially low” and won’t be sustainable, in that, at some point, all three (dominant) players — Vodafone Idea, Airtel and Jio — would need to sit down and discuss the matter.

“The pricing environment is artificial as all three operators are haemorrhaging cash, and therefore at some point, pricing needs to return to a more normalised level,” he said.
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‘Blocking Huawei not Good for Industry’
The telecom industry is weighed down by nearly Rs 8 lakh crore debt and still battling price wars triggered by Jio, which entered the market over two years ago and disrupted it with free voice calls and low data prices.

Older carriers were forced to match rates to retain customers, putting immense pressure on revenue and profit. Fringe players exited while erstwhile Vodafone India and Idea Cellular, then the second and third-largest carriers, were forced to merge, leaving only three major private players in the market.

The merged entity as well as Airtel have been posting losses for their respective India businesses, with Jio the only profitable telco. But all three have run up substantial debt levels, and uncomfortable leverage ratios and looking to raise cash by selling assets such as towers and fibre.

The Vodafone Group CEO said India had gone through tough times, although the long-term situation appeared better, with post-sector consolidation and emergence of three evenly strong players.

“Pricing is lowest in the world for data. Average consumer is consuming 12 GB at price points you don’t see anywhere else. Ultimately pricing will go up, that does not mean it jumps, it will moderate. Now heavy discounting is going on,” Read said.

He reiterated that it was too early to auction 5G airwaves in India, amid continuing financial stress in the industry.

In fact, he does not envision healthy industry participation in an early 5G spectrum sale, given that “people are in a very challenged economic environment”, adding that it’s critical for the “industry to get into a healthier place” first.

Vodafone Idea, he said, is making “really good progress” on its dual networks integration, which has been accelerated from “four to two years”.

“We want to invest in and integrate networks because there is a lot of data traffic and we need performance,” he said.

He added that the mega Indus Towers-Bharti Infratel merger will close by May. The company may sell its stake in the combined entity to raise funds to invest in networks.

Read also said it’s too early to deploy 5G networks amid low compatible handset availability. “If we bring in 5G services now, we won’t be using high amounts of handsets, whereas in another 2-3 years, that would be the right way.”

UK’s Vodafone Group also feels blocking Huawei would not be good for the telecom industry, amid the bitter clash between the US and China over network security and accusations from President Donald Trump’s administration that the Chinese networks vendor had enabled state espionage by Beijing.

“Huawei plays a major role in the supply chain within our industry. We have three major clients providing equipment now, and if we concentrate down to two players, that is an unhealthy position not just for us as an industry but also national infrastructure in the country,” Read said.

(The reporter is in Barcelona to attend Mobile World Congress 2019 at the invitation of Qualcomm.)

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