Trai Might Help Vodafone Idea and Bharti Airtel In Improving Their Financial Situation

The Telecom Regulatory Authority of India could bring in some reeling changes to help the financial health of the telecom industry

By December 19th, 2019 AT 12:15 PM
Highlights
  • The first step is the deferment of the zero IUC regime
  • Second step is the setting of a floor tariff
  • These steps could also help the telcos in bringing big investments

In a situation of distress where the older telecom companies in India, Vodafone Idea and Bharti Airtel are under massive financial pressure and are surrounded by dues and debts, some of the steps which are to be brought forth by the Telecom Regulatory Authority of India (Trai) might help these telcos in climbing back to sustainable levels. As per a new ET report, some of the steps that Trai is going to execute in the industry include the deferment of the zero-IUC regime wherein the telecom operators will be required to pay the Interconnect Usage Charges for the calls that they carry on their network for other operators. Also, the Trai is ideating on the floor pricing for the telecom industry, which if comes into play, will increase the revenue of the telecom operators. This could be the much needed holy grail which the incumbent telecom operators, Bharti Airtel and Vodafone Idea currently need to bring their financials to the sustainable levels.

trai-help-vodafone-idea-airtel

Trai to Help Telecom Industry With Regulatory Measures

The worst thing that has happened with these older telecom operators right now is the Adjusted Gross Revenue (AGR) issue, on which the apex court in India passed a verdict following a decade and a half legal row. After this verdict, telecom operators Bharti Airtel and Vodafone Idea are the worst hit ones. Vodafone Idea has dues worth Rs 53,000 crore which it has to pay to the Department of Telecommunications (DoT) and similarly, Bharti Airtel has to pay dues worth Rs 35,500 crore to the DoT on the same lines. These dues are made up by the license fees, spectrum usage charges, interests, penalties and the interests on these penalties. However, there are a few steps that could ease the stress for these telecom companies.

Positives of Zero IUC Regime Deferment

As per the analysts, the steps which Trai will execute will also help these telecom companies in attracting investment. The latest relief currently comes for the Vodafone Idea and Bharti Airtel duo which will continue receiving payment for its cellular services and for carrying calls through the means of IUC. As per the current situation of the industry, since most of the outgoing calls flow from Reliance Jio, given that it is the largest telecom operator in the industry right now, the net payout from Reliance Jio comes to Vodafone Idea and Bharti Airtel which is one of the things that will increase its operating revenue, something these two telcos might have lost if the IUC regime had been done away with.

Trai Floor Pricing Could Bring Positive Effects

Floor pricing if brought into the industry, will be another big win for the telecom companies. There is a possibility that such a floor pricing would open up chances for a further tariff hike. Bharti Airtel chairman, Sunil Bharti Mittal has said that the floor tariff would bring the ARPU to Rs 200 first then to Rs 300, which is a much-needed thing for the industry right now. The Cellular Operators Association of India (COAI) has said that the increase in floor price would also help the telecom sector in attracting massive investments as well. Trai has currently invited stakeholders comments on this issue, although the regulator has also termed such a step to be anti-consumer as well.

Overall, few of the steps from Trai like the postponement of the zero IUC regime and the floor tariff would help the industry in numerous ways and would breathe back a little life into the industry especially for financially strained telecom companies, Bharti Airtel and Vodafone Idea.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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