Trai Is Taking These Steps to Improve Health of Telecom Sector But Still There are Hurdles

Telecom Regulatory Authority of India (Trai) might bring floor pricing in the industry to help the telecom operators in increasing their revenue

By December 25th, 2019 AT 7:42 PM
Highlights
  • Trai has also deferred the shift to zero IUC regime to 2021
  • Vodafone Idea and Bharti Airtel have to pay dues worth Rs 90,000 crore combined
  • The dues are two be paid to DoT in a few days

The Telecom Regulatory Authority of India (Trai) is responsible for overseeing the regulations in the telecom and other related industries. The year 2019 has been a very important one for the telecom regulatory majorly because of the regulations that it has issued and whatever has ensued in the sector as a whole. But, right now, the responsibility on the shoulder of Trai is a huge one because the telecom regulator has to take care of the industry which is financially bleeding and is in the worst possible situation imaginable. The telecom operators are under massive debt and are running huge losses. In such a case, Trai wants to introduce measures which would help the telecom operators in cutting their losses and improving their financial health. There are some discussions which are currently going on, and consultation papers which are in the process that could help the telcos in fixing their finances. Here are some of the measures that Trai might introduce and the hurdles that they face.

trai-steps-telecom-industry-hurdles

Floor Pricing in Telecom Industry

The first measure that the Telecom Regulatory Authority might make in favour of the telecom operators is the move to bring a floor tariff regime. This would essentially mean a second tariff hike in the telecom industry. The subscribers in the telecom industry have already seen a tariff hike in the recent weeks, but if the floor pricing plan comes into effect, then the tariffs would further increase and help the telecom operators in raking in more revenue. Bharti Airtel is already keeping hopes for ARPU of Rs 200 per month, which might climb up further to Rs 300 if the floor pricing plan works. On this front, Trai has already floated a consultation paper which is awaiting comments from various industry stakeholders. Although the regulator is itself reluctant for floor pricing because of the anti-consumer aspect of the rule, if brought into effect, it will bring more revenue for the companies like Vodafone Idea and Bharti Airtel.

Deferment of Zero IUC Regime for Telecom Companies

Another way in which Trai has helped Bharti Airtel and Vodafone Idea is by extending the shift to the zero-IUC regime. Previously, as per the former plan which was to go in effect, the shift to the zero-IUC regime would happen at the end of the current year, and telecom operators would follow the Book and Keep (BAK) process for IUC payments. However, now with the new deferment, the IUC of 6 paise per minute would stay as it is until January 2021. This means that Bharti Airtel and Vodafone Idea would continue to receive net IUC payouts from Reliance Jio, which would add to their revenues and bring them some relief.

Hurdles Still in Industry for Telecom Operators

Now, even though the telecom regulator is bringing these two new changes for the telecom industry and the incumbents like Vodafone Idea and Bharti Airtel are going to be the two beneficiaries of these changes, there is still a long way for these telecom operators to get full relief given their condition. While Vodafone Idea has to pay dues worth Rs 53,000 crore to DoT within two months, Bharti Airtel has to shell out Rs 35,500 crore to the DoT in the name of license fees, spectrum usage charges, interests and penalties. The lowering in license fee, which is a policy matter as of now, if happens, would bring further relief for the telecom operators.

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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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