Government officials have reached out to Telecom Regulatory Authority of India (Trai) to fasten up the process and decide floor tariffs which would restore the long term viability of the telecom sector. According to the words of a senior government official “The regulator is being pushed to soon come out with a floor price, once the consultation completes this month.” Trai facing the burden from government and sector to fix a floor price has circulated a consultation paper for voice and data services on telecom networks. However, consultation papers have been termed as ‘market-distorting’ by economists.
Floor Tariffs would Recover Revenues in Sector
Bharti Airtel stated that the ARPU must raise till Rs 200 and even Rs 300 for which a floor price will be required. As per the telco experts getting a floor price would recover revenues in the sector, which would boost up the morale and confidence of lenders and investors of the sector. Government has been pushing Trai to fix up floor pricing as Vodafone Idea is struggling to pay their AGR dues by March 17, 2020. Officials involved in the discussion suggested soft loans to stressed telcos on easy terms which would ensure their survival in the market. Vodafone Idea has been trading at a market cap of Rs 11,149 crore which is far more less than their dues which is worth Rs 57,000 crores. Currently, Vodafone Idea has paid only Rs 3,500 crore from their assessment of AGR dues which is worth Rs 23,000 crores.
Relief Package for Telcos is Still Work in Progress
As per the reports of ET, Government is planning to set a stress fund which would help the stressed telcos and ensure their sustainability in the market. Not only this, measures like deferment of license fee and spectrum usage charge have also been planned by government officials. Another senior official marked that “It is a complicated situation, and we are trying to find a solution which would ensure that 300 million network users will have their network connections on their phone.” Supreme court has not rolled out any relief on the AGR dues to telcos. However, attention is being shifted to concessions on non-AGR issues.