Convergence Plus
Friday, July 20, 2018
Telcos, ISPs cry foul over public Wi-Fi model; ask PMO to reject TRAI paper

Telcos, ISPs cry foul over public Wi-Fi model; ask PMO to reject TRAI paperObject to PDOs, say the decision will hurt the sector, lead to an uneven playing field
Telecom operators and internet service providers have opposed the public Wi-Fi model recommended by the Telecom Regulatory Authority of India (TRAI) and have written to the Prime Minister’s Office (PMO) saying the move would compromise national security.
The separate letters, copies of which have been seen by BusinessLine, said such a decision would adversely impact the debt-ridden industry and also lead to a non-level playing field between licensed and unlicensed players.

Based on existing rules for cyber-cafes, TRAI had recommended that a new set of players, called Public Data Office Aggregators (PDOAs), be allowed to set up Public Data Offices (PDOs) to resell internet services, much on lines of the PCOs of yesteryear which facilitated telephone calls.

However, in its letter, the Cellular Operators Association of India (COAI) has called for continuing the current licence model, in which only those with permits are allowed to provide internet services. This, it said, will help maintain stability and consistency in licensing and regulatory framework.

The COAI said acceptance of TRAI’s recommendations would be a violation of Telegraph Act, a disruption of the level-playing field, and a contradiction of the TRAI Act, and a loss of revenue to the exchequer.

The COAI, whose members include Bharti Airtel, Reliance Jio, Vodafone, and Idea Cellular, has been opposing implementation of TRAI’s suggestions for public Wi-Fi services since April 12, 2017.

It said allowing services like the internet to be resold under a registration/authorisation without obligation of any statutory levy, compliance with security guidelines or TRAI regulations, would be against the very basic foundations of the Unified Licensing Regime, and should be allowed only through a Unified Licence for Virtual Network Operators (UL-VNO).

“Therefore, we would request the government, in the interest of the level-playing field, to reject these recommendations ab initio. However, if government still feels that PDOAs should be allowed for rural areas/ villages, then it should be mandated in rural areas/ villages through licensing,” said Rajan S Mathews, Director General, COAI.

The COAI has also written to Telecom Secretary Aruna Sundararajan on the matter. The Internet Service Providers Association of India (ISPAI) has also written to the PMO, stating that it was disappointed with TRAI’s recommendations as it aimed to bypass licensing requirements, and would be detrimental to investments made by small licensed ISPs.

The new regime would only force small ISPs to shut shop and lose their investments. It would also only serve large foreign operators who intend to work without being subjected to any licensing regime, revenue-sharing and security requirements, the ISPAI said.
“We therefore request the PMO to inform the DoT (Department of Telecom] to not accept the recommendations of TRAI to maintain the level-playing field and to protect the business of small ISP operators (sic). We also request DoT to allow us an opportunity of personal hearing at the earliest,” said Rajesh Chharia, President, ISPAI, in the letter.

Meanwhile, Assocham has also written to DoT, calling the TRAI recommendations ‘completely unjustifiable and unwarranted’, reasoning that it would disrupt the entire licensing framework and affect the huge amount of investment already made in the telecom infrastructure.

If PDOAs need to be introduced, then it should be done under a licensing framework only, the industry body added. (Source: The Hindu BusinessLine)

Telecom gear import may cost more as rupee falls

Telecom gear import may cost more as rupee falls The rupee’s fall to an all-time low versus the US dollar is likely to push up costs of imported telecom gear used in mobile phone networks by nearly Rs 4,500-5,000 crore and exacerbate the financial stress of telecom operators, compelling them to consider deferring 4G network expansions in the near term if the Indian currency remains weak, said industry executives and analysts. Sustained fall of the rupee versus the greenback, they said, could also increase the foreign debt servicing costs of some phone companies and hit their profitability in the coming quarters since as much as 30% of the sector’s Rs 7.7 lakh-crore debt is said to be dollar-denominated. The local unit touched an all-time intraday low of 69.09 a dollar on Thursday. However, the rupee recouped some of its losses on Friday and closed at 68.47 a dollar.

A whopping 80% of the telecom equipment used in local phone networks is imported from foreign vendors such as Ericsson, Nokia, Huawei, Samsung and ZTE, which is why big telcos such as Bharti AirtelNSE 1.06 %, Vodafone India, Idea CellularNSE 4.67 % and RelianceNSE 2.91 % Jio Infocomm are estimated to collectively splurge nearly $7 billion (over Rs 48,000 crore) annually on network equipment. “Accordingly, the sharp fall of the rupee is estimated to jack up the mobile network devices import bill for the sector by 8-10%,” said a telecom analyst at a leading global brokerage, speaking on condition of anonymity.

Rajan Mathews, director general of the Cellular Operators Association of India (COAI), said: “The downward movement of the rupee would make imported 4G gear procurements more expensive for telcos in the immediate term as bulk of their equipment and service contracts are dollar-denominated, which could aggravate financial stress levels in the industry.”

The COAI represents large telcos including Bharti Airtel, Vodafone India, Idea Cellular and Jio Infocomm. Mathews said that margins of telecom operators would also take a hit if the rupee slide was not arrested quickly, especially since phone companies would “suddenly be compelled to earn a lot more rupees to be able to buy the requisite quantum of dollars to pay their network gear import bills and upcoming dollar-debt servicing obligations”.

Another analyst at a foreign brokerage, who did not wish to be identified either, backed the view, saying “telcos could be forced to put major network capex deployments on hold in the short term amid the sharp rupee fall, especially since most telcos seldom hedge their dollar-denominated gear import contracts for short-term currency swings”.

Mainline telecom equipment used in mobile networks includes core network systems, radio gear such as base stations, mobile switching centres, network management systems, billing systems and transmission devices. Asenior executive of one of the top three telcos said the sharp fall of the rupee had come at a particularly bad time, given that the older carriers were trying to quickly ramp up their 4G networks to compete effectively with the 4G entrant, Reliance Jio Infocomm. Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio did not reply to ET’s queries on the impact of the rupee depreciation on imported network gear procurement costs. (Source: Economic Times)
MTNL approaches govt for allotment of 4G spectrum

MTNL approaches govt for allotment of 4G spectrumThe state-owned corporation is seeking 4G radiowaves in both Delhi and Mumbai service areas where it operates.
Even as its revival options are being mulled, loss-making MTNL, in a bold move, has approached the government seeking allotment of 4G spectrum in two bands and offered its equity in return. Mahanagar Telephone Nigam Ltd (MTNL) CMD P K Purwar said the firm has written to the Telecom Department seeking spectrum in the 1800 and 2100 MHz bands to launch 4G services in order to strengthen its service portfolio in a fiercely-competitive telecom market.

"To survive in the mobile telephony market, 4G presence is a must. MTNL has submitted a proposal to the Department of Telecom (DoT) for allotment of 4G spectrum recently," Purwar told PTI. The state-owned corporation is seeking 4G radiowaves in both Delhi and Mumbai service areas (also called circles) where it operates.

"In the market, over 85 per cent downloads are taking place in data in 4G. In this competitive landscape every single operator has to have presence in 4G. To compete effectively, MTNL also requires 4G services in its portfolio," he said. MTNL is seeking 10MHz in Delhi in the 1800 band and 5MHz in Mumbai in 2100 band, and is keen to start its 4G services in the current financial year. The corporation currently has spectrum in the 900, 1800 and 2100 MHz bands, he said, adding that it has 2.2 MHz in 1800 band and 5 MHz in 2100 bands used for 3G services.

"We have said that government has two roles -- one as licensor and another as a promoter of MTNL. As a licensor they are duty-bound to take their financial charges for allocation of spectrum. MTNL has requested that payment should be taken by the government in the form of equity. As per our initial assessment, the spectrum block should cost roughly Rs 6,500 crore," Purwar said. MTNL, he added, is ready to issue equity shares to the government as per market rate in lieu ofspectrum allocated. This, he said, will ensure that MTNL is not burdened with additional debt.

The government currently holds 56 per cent stake in MTNL, while Life Insurance Corporation has about 19 per cent. The rest is with the public. MTNL's debt stands at a staggering Rs 17,000 crore, and its annual interest burden is close to Rs 1,450 crore. Bruised by a fierce competition from private sector players, MTNL's losses stood at Rs 2,893 crore in 2014-15, Rs 2,005 crore in 2015-16, and Rs 2,970 crore in 2016-17.

Telecom Minister Manoj Sinha, in a written reply to the Lok Sabha in February, had pointed out that both BSNL (Bharat Sanchar Nigam Ltd) and MTNL have been incurring losses for a number of years, and therefore, have been declared as incipient sick as per Department of Public Enterprises (DPE) guidelines. Sinha had also said that the revival plan of MTNL prepared by its consultant "is under consideration" by DoT.

The recommendations include defending current revenue and additional revenue streams, asset monetisation, lowering retirement age from 60 to 58 years for employees, Voluntary Retirement Scheme (VRS), debt restructuring and finding synergy in operations of MTNL and BSNL.(Source: ETtelecom)

Over Rs 8,000 crore telecom projects face delays in north east

Over Rs 8,000 crore telecom projects face delays in north eastThe government’s ambitious plan to provide seamless connectivity across the country’s north-eastern region has made little headway despite the Union Cabinet approving a comprehensive plan more than three years back. Budgetary estimate for the plan - that would have provided a stable telecom network in the north-east — has gone up from the originally-envisaged Rs 5,300 crore to over Rs 8,000 crore. However, not even one project has been completed so far, official sources said. The states that would be covered as part of the project are Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. The projects are critical in nature as they require work in the border areas and strategically-sensitive zones.

According to the originally-envisaged plan, a total of 8,621 villages (and the national highway region around them) had to be provided mobile coverage through the project that received approval from the Cabinet in September 2014. While one part of the project — covering areas in the sensitive zones of Arunachal Pradesh and two districts of Assam — was accorded to BSNL, the actual work is yet to take off.

BSNL had called for tender in April 2016, and had awarded work to two companies — Vihaan Networks (VNL) and HFCL — in April last year under the preference to domestically-manufactured telecom products policy. However, the telecom department is yet to give final orders to award the work here. On the other hand, the project for the other six states and remaining districts of Assam has been stuck for the last many years. The work for this was handed over to the Universal Service Obligation Fund (USOF) of the telecom ministry, but did not see much movement until last year.

While USOF had floated a tender for the project only in May 2016, but this had failed to get any response initially. Following this, a new tender was issued in March last year that had received only one bid from Bharti Airtel, which was awarded a Rs 1,610 crore contract. However, work is yet to be completed even here, and meanwhile Airtel opted out of Meghalaya, which has further slowed down the progress of the project. The telecom department and USOF have now decided to have both 2G and 4G in Meghalaya, taking the cost of the project in the state to Rs 4,300 crore against the originally-envisaged Rs 1,400 crore.

Telecom minister Manoj Sinha has said that improving telecom infrastructure in the north-east is a priority for the government. “Projects are running behind schedule due to a variety of reasons, which include inadequacy of the agencies that are implementing the projects; hindrances due to various developmental activities like expansion of national highways; hilly terrain and remote and inaccessible areas. Law and order related issues are another trouble area for the region,” Sinha said recently. (Source: Times of India)

Aircel parent infuses Rs 95 crore to help pay staff, meet other expenses

Aircel parent infuses Rs 95 crore to help pay staff, meet other expenses Maxis Communications, the parent company of beleaguered Aircel, has provided Rs 95 crore to help the bankrupt mobile phone operator pay salaries to its around 5,000 employees and tide over immediate operational expenses.

Aircel management has been closely working with Malaysiaheadquartered Maxis, owned by businessman T Ananda Krishnan, for the emergency infusion, the person told ET. Maxis is making the infusion through Mauritius-based subsidiary Global Communication Services Holdings (GCSH).

In a statement, GCSH said it has infused Rs 95 crore at March end to pay salaries and to meet some expenses for about a month-and-a-half till when the Interim Resolution Professional (IRP) was appointed by the National Company Law Tribunal (NCLT). Around 5,000 employees of Aircel, which filed for bankruptcy protection in the NCLT in February, have not been paid salaries since that month. Security personnel and contract staff, too, have not received their dues, raising safety concerns for the operator that is struggling to service a debt of over Rs 50,000 crore due to falling revenue and dwindling cash flows amid fierce competition.

Krishnan, who over the past 12 years had about $7 billion into Aircel without any returns, had decided to pull the plug on the telco, hamstrung by the brutal competition and legal woes that had stymied the company’s attempts at merging with Reliance Communications to survive.

Aircel’s quarterly operating profit of Rs 120 crore in July 2016, before Reliance Jio started services in September 2016, plunged to an operating loss of Rs 120 crore in December 2017. Aircel did not respond to ET's queries. The Malaysian businessman’s latest dole out will be a near-term breather for the telco, which, under the bankruptcy process, is trying to find ways to get operations going again and repay its lenders. Experts say that while the amount is woefully inadequate, it at least is a sign that the management and the promoters are trying to take care of the carrier’s human resources which are key to its bid to restart operations.

ET had earlier reported that Iyer, in a letter, had assured employees that the company had initiated discussions with “an external party” to provide funds for salary dues. While admitting Aircel’s petition for bankruptcy protection, an NCLT bench had said it believed there was potential to revive the business, given the telco’s revenue generation and assets worth more than Rs 32,000 crore, including spectrum. Besides NCLT, Aircel has been battling legal tussles with tower firms GTL Infrastructure and America Tower Company (ATC), and vendors such as Swedish gear maker Ericsson over unpaid dues. (Source: Economic Times)

Foxconn's Nokia factory talks may bear fruit

Foxconn's Nokia factory talks may bear fruitFoxconn Technology is in an advanced stage of talks with the Tamil Nadu government to resolve a Rs21,000-crore tax dispute, which could help revive the Nokia mobile manufacturing plant in the state and provide employment to thousands. The Taiwanese company has taken a significant step already in this direction, buying some machines from the plant earlier this year. A senior state official said Foxconn was keen to revive the plant, which is lying defunct for more than three years now. The state government held several rounds of discussions with the company, which now needs to bring in a formal proposal, the official added.

Once the company makes an application, the state would approach the Centre to lift an asset freeze on the plant and facilitate the revival of the factory which at its peak employed some 12,000 people and produced more than 100 million handsets a year. At the time, it was the world’s largest facility for the then mobile handset market leader Nokia, and was a showcase for India’s manufacturing capabilities.

“Foxconn’s India arm is talking to their headquarters to get internal clearances, and once they give a formal proposal, we may move the department of revenue, Government of India, to at least release the plant for their operations,” the official said. “They are keen, because they’re a neighbour and they know the local ecosystem, workers, etc., and our only agenda right now is to make sure that the machinery and building that is lying vacant, gets utilised again,” he said.

Foxconn has a phone manufacturing facility at Sri City, Andhra Pradesh, located on the border of Tamil Nadu’s capital, Chennai. It employs around 6,000 people there and produces handsets for the likes of Xiaomi, Nokia and Gionee.

The world’s largest contract manufacturer, which is also the biggest contract manufacturer for phones in India, did not respond to ET’s request for comment. But a person familiar with the discussions at the company said “the plan is to go further in this direction".

Another person said Rising Star Mobile India, through which Foxconn runs its India manufacturing operations, bought machinery from the Nokia plant — shut in late 2014 — for an undisclosed amount after the Finnish company got permissions from the Central income tax authorities, as well as the Madras and Delhi high courts to sell those. It required the permission as there is a freeze on the assets due to the unresolved tax case.

"Earlier this year, Nokia engaged with a buyer interested in purchasing production machinery,” a Nokia spokesperson said. “Subsequently, we worked with the respective authorities and secured the necessary permissions for executing the sale of those specific production machinery."

Nokia has been trying to revive the plant for years and had even closed in on the Essar Group as a potential buyer two years ago. But the ongoing tax case thwarted the sale. The factory was then valued at Rs 360-415 crore. In fact, the tax dispute had kept the facility out of Nokia’s global deal four years ago to sell its handsets business to Microsoft.

"We remain open to discussions on the sale of the remaining assets including the Nokia building unit, and hope for similar support from the authorities should we find a suitable buyer," the Nokia spokesperson added.

Foxconn had earlier approached the state and Central governments to take over and revive the plant, but with a condition that it should not be saddled with liabilities from the legal issues. The talks back then had fizzled out.

Industry insiders said the latest efforts for the plant's revival appeared to be on a more solid ground as it’s a win-win for both the state government and the company. Success will help the Tamil Nadu government — which has the backing of the Centre — to showcase this as a successful development and employment generation initiative for a state which has seen political turmoil over the past year.

Foxconn, on its part, has plans to aggressively expand its capacity in the country so that it can export from here. Reviving the Nokia plant will allow Foxconn to also restart its own unit in the same Nokia SEZ, which was a feeder to the now-idle main manufacturing facility, even as it explores other states including Uttar Pradesh and Maharashtra for expanding operations.
The plant’s revival will also aid in the government’s larger aim of producing 500 million phones a year by 2020 under the Make in India programme, and bring to a closure another chapter which — together with the Vodafone-India retrospective tax dispute — had hit India’s image as an investment destination. (Source: Times of India)

Reliance Jio to raise up to $2.2 billion debt to fund RCom deal

Reliance Jio to raise up to $2.2 billion debt to fund RCom dealReliance Jio will receive funding support from parent firm RIL, and Jio’s fundraising plans may be finalized in the next few weeks
Reliance Jio Infocomm Ltd will raise as much as $2.2 billion in foreign currency debt to fund the purchase of Reliance Communications Ltd (RCom)’s wireless assets, according to two people directly aware of the company’s discussions with lenders.
While Reliance Jio hasn’t disclosed the value of the transaction to purchase RCom’s assets, the people cited above said that the deal would be funded through a mix of debt and internal accruals.

Reliance Jio, a subsidiary of Reliance Industries Ltd (RIL), will receive funding support from the parent, said one of the two people cited above. “The modality of the fundraising is being worked out and no decision has been made yet.”
While requests for comments sent to RIL remained unanswered until press time, a senior company official who did not wish to be named said that all necessary approvals for the RCom deal were in place and the fundraising plans will be finalized in the next few weeks.

In December, Jio agreed to buy RCom’s wireless spectrum, media convergence node assets, 43,000 towers, and around 178,000km of fibre network for an undisclosed sum. The deal involves primarily cash payment and an assumption of the deferred spectrum payment liabilities of RCom to the telecom department.

In a January report, rating agency Icra Ltd said that any additional debt due to the acquisition will not impact Reliance Jio’s credit profile given the strong backing of its parent.

Till 31 March 2017, RIL had invested Rs45,000 crore as equity and Rs33,785 crore as non-cumulative optionally convertible preference shares in Reliance Jio. It has also guaranteed Rs19,232 crore of Reliance Jio’s outstanding debt in the period. RIL owns 99.44% in Reliance Jio.

Reliance Jio turned profitable in the quarter ended 31 December, about a year after it started services in September 2016. It reported a profit of Rs504 crore in the fiscal third quarter.

“Jio’s profitability is to a large extent related to its low costs since Jio needs to maintain a single 4G network, while its competitors have to manage 2G and 3G networks along with 4G offerings. Going forward, Jio will also benefit from the recent reduction in call termination charges by Telecom Regulatory Authority of India since a vast majority of calls terminate in rival networks,” said Mahesh Uppal, founder, ComFirst consultancy, a telecom sector advisory firm.

In December, Anil Ambani-led RCom had announced a new asset monetization plan and its exit from the strategic debt restructuring programme.

Ambani said that his company had agreed to a new debt resolution plan that will see RCom sell its assets—spectrum, fibre, telecom towers and real estate, apart from Dhirubhai Ambani Knowledge City—and does not entail lenders and bond-holders writing off dues or converting it into equity. Through this process, he hoped to cut RCom’s debt by Rs39,000 crore from the Rs45,000 crore it owed lenders at the end of October, Mint reported in December.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.(Source:Mint)

Re-verify mobile numbers online from January 1, 2018: DoT to telcos

Re-verify mobile numbers online from January 1, 2018: DoT to telcosMobile phone users will have to wait till January 1, 2018 for re-verifying their mobile numbers through Aadhaar, without visiting the retail outlets of telecom companies.
NEW DELHI: Mobile phone users will have to wait till January 1, 2018 for the comfort of re-verifying their mobile numbers through Aadhaar, without visiting the retail outlets of telecom companies. Foreign nationals who do not have Aadhaar and did not have the option to get their mobile numbers re-verified will be able to do so by visiting their carrier’s retail outlets and submitting their passport details, the telecom department said Friday. A telco representative can also visit the subscriber.

The DoT mandated telcos to re-verify mobile numbers belonging to non-resident Indians (NRIs) and senior citizens above 70 years not having Aadhaar or their mobile number registered with Aadhaar, besides physically challenged people, by using systems created by telcos on their websites.

Those having mobile numbers registered with Aadhaar will be able to use 14546 as an interactive voice response system (IVRS) helpline number for generating one-time password (OTP), for getting their mobile numbers re-verified.

“The licensee must ensure that the above mentioned category of subscribers shall be able to re-verify their mobile connections through these alternative methods by January 1, 2018,” the DoT said in a notice on Friday, detailing processes for five sub-categories of subscribers.

“The licensee shall use 14546 as the non-metered short code for IVRS based OTP authentication process the re-verification of mobile subscribers,” the department added in an 18-page note, which was also issued to telecom players.

The telecom department has specified the processes telcos have to adopt for doing the re-verification online for each of the subset of subscribers, while addressing the issue of changes in customer acquisition form or CAF, which was flagged by carriers. The DoT has now allowed telcos to use electronic forms or e-CAF while completing the re-verification process on their websites.

The clarity from DoT will now allow carriers to put processes in place and begin online re-verification from January, 2018. For instance, telcos will have to create a web portal or page specifically for NRI customers. It also addressed the demand of carriers to provide an extension of four to six weeks to implement the government-mandated processes.

ALSO READ: Telcos suggest user-friendly innovations for rural customers to spur mobile-Aadhaar linking

"We're looking into and evaluating the processes that have been defined by the DoT," said Cellular Operators Association of India, which represents all carriers including Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio.

The DoT has been mandated by the Supreme Court to re-verify all mobile numbers, and had set the deadline of February 6, 2018. With a month-long delay, meeting the deadline looks tough.

“In case required, we can seek an extension from the apex court. But if the new methods are adopted, it will fasten the process of verification manifold,” a DoT official said, but did not mention whether the call for seeking the extension has been taken internally.

The Unique Identification Authority of India (UIDAI) had said mid-last month that mobile phone users will no longer need to visit stores of telcos from December 1, after the DoT identified three methods of re-verification of mobile phone numbers – to use OTP or one-time password generated through SMS, IVRS and through the telcos’ mobile apps – to ease the process of re-verification.

DoT, in October, had also allowed re-verification through iris-based biometric devices and at the doorsteps of consumers who are unable to use OTP or fingerprint authentication or who are incapacitated and cannot go to retail stores. While telcos submitted the processes for approval to DoT and UIDAI, the latter turned down the option of OTP through SMS, citing security issues.

It is unclear at the moment if the DoT has disallowed home visits. (Source: ETTelecom)

Telcos wrote off up to $50 billion due to Reliance Jio: Sunil Mittal

Telcos wrote off up to $50 billion due to Reliance Jio: Sunil MittalReliance Jio's prolonged free voice and data offers were a major reason for telecom companies writing off investments of up to $50 billion, said Bharti AirtelBSE -1.00 % chairman Sunil Mittal, who also called out the newcomer for opposing a relief package for the debt-laden sector. In an interview with ET, Mittal said that Bharti Airtel had benefited from the rapid consolidation in the telecom industry, which has been accelerated by Jio's entry with free services and could well return to the No. 1 slot by revenue market share by March 2019, beating the Vodafone India-Idea Cellular combine.

"Market has consolidated to a level which was an aspiration, but never thought to be possible. No. 2 Vodafone and No 3 Idea being put together, is unprecedented... you never see two strong companies merging," Mittal said.

The Bharti Airtel chairman said his company would be open to acquisition talks with Aircel, whose merger with Reliance Communications (RCom) recently fell through. "I think for them (Aircel), it's only Vodafone-Idea combinationor us. Whenever there will be a possibility of a conversation, I have no doubt, we will be a part of that conversation," he said, when asked if Airtel was the natural suitor for the Maxis-owned carrier.

Airtel had last year bought Aircel's 4G airwaves in the 2300 MHz band in eight circles for Rs 3,500 crore through a trading deal. Jio's entry in September 2016 with free calls and data tariffs disrupted the Indian telecom space, forcing older telcos like Bharti Airtel, Vodafone and Idea to dramatically drop tariffs to retain customers and stay competitive.

Since April this year, Jio has started to charge for data, albeit at very low rates, while voice is free for life. Mittal believes the fierce price war in the sector will take two more quarters to stabilise.

This bruising price war has adversely impacted the revenue, profitability and cash flows of all telcos, forced Vodafone and Idea to merge, left smaller companies like RCom and Aircel struggling for survival, and pushed the government into setting up an inter-ministerial group to suggest relief measures for the industry.

"My estimate is about $40-50 billion have been written off by various companies, many of whom are international investors. It (the write-offs) is largely due to Jio...the pricing. Having such a long, free promotional period and in some sense, decided by laws of the land in their favour, is unheard of. In my opinion, in Europe or US, this would have been stopped. It would have been seen as predatory," said Mittal, who recently turned 60.

Most of the write-offs accrue to Vodafone, Telenor, Etisalat, Tata Teleservices and Reliance Communications, which is shutting down voice services by the end of the month. Mittal said the measures proposed by the inter-ministerial group (IMG) that had been set up to devise a relief package for the telecom industry, were 'inadequate' and expressed the hope that the union cabinet, which was the final authority, would consider other measures such as reducing licence fee and spectrum user charge.

"Sixteen years (instead of 10 to pay for auctioned airwaves) without reduction of interest is not giving any benefit. It's absolutely inadequate," he said. He added that the government had recognised the crisis in the industry, which is saddled with a debt of Rs 5 lakh crore, by setting up the IMG in the first place. "But one operator (read: Jio) opposed any relief package for the industry, which is rare. I think outcome of the IMG recommendations, therefore, was weakened from the objectives it started with."

In its submission to the IMG, Jio had blamed the older telcos for their own financial plight due to under investment into their operations and over dependence on debt funding. The billionaire industrialist said his company accepted the telecom regulator's recent proposals on the caps on airwaves holdings, but criticised the regulator's suggestion to remove the 50% limit on telcos' holding airwaves within a specific spectrum band, saying it was designed to allow one operator to hold more than 10 MHz in the lucrative 4G band of 850 MHz.

"Moving (the overall spectrum holding limit from) 25 to 35% is a very good move given there are only four operators left. But in every band, there should have been a 50% cap. This whole thing is designed to allow more than 10 MHz in 850 MHz...but it's alright. We accept it," Mittal said.

Jio holds the maximum amount of airwaves in the 850 MHz band across all 22 circles, with 10 MHz or close to it in most circles, and above 10 MHz in three, according to the regulator's data. Trai's recommendation to relax the intra-band caps, if accepted by the government, will offer Jio the option of adding more airwaves in the band, likely from RCom, which has just received 30 MHz of airwaves in that band from its merger with Sistema Shyam Teleservices. (Source: Economic Times)

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