Vodafone India Says Cut in IUC Charge to Hurt Rural Coverage, Idea Says Support Falling Data Rates

By June 16th, 2017 AT 6:37 PM

Aditya Birla Group-owned telco Idea Cellular said that the government policy framework should allow telecom service providers to recover their costs, but said that it is completely in agreement that data prices need to come down, according to media reports.

Vodafone India during its IMG meeting said that IUC, which is currently at 14 Paise, is already below cost, and any further cut in these inter-operator charges could hurt rural coverage. It also favoured lowering of spectrum usage charges or completely do away with it.

Vodafone-Idea-Cellular-merger

Both Vodafone and Idea said the lives like licence fee, spectrum usage charges and USO levy should be subsumed by GST, the new indirect tax regime to be rolled out from July 1.

An Idea executive said that the telco would put more investments into business. “We have proven to them that very significant equity infusion has been made, and will continue to happen,” the executive said at the IMG meeting.

Vodafone during its meeting with the IMG rejected Reliance Jio’s views that top telcos have not invested enough in the sector, adding that it was also ready for deploying new technology.

“Vodafone has the largest FDI invested in the country, and we have brought in a lot of equity since the government has come in. In the last two years alone, we got Rs 55,000 crore of equity, including Rs 48,000 crore last year which is by far the largest across any investor and any sector,” a Vodafone executive was quoted as saying. He added that there is financial stress in the sector, but Vodafone doesn’t have the highest debt.

Reliance Jio earlier this week told the IMG that incumbent telcos like Airtel, Vodafone and Idea are responsible for the financial stress as they are running businesses on debt and investing heavily in unrelated sectors. It had also alleged that the financial stress is their own creation.

The inter-ministerial group, comprising officials from ministries of communications and finance, is meeting telecom operators this week to discuss the financial difficulties being faced by the industry and measures that can be taken to ease the situation. Indian telecom operators are currently reeling under a Rs 4.6 lakh crore debt, and are facing pressure on profitability and revenue due to the intense competition introduced by the entry of Jio.

State-run telecom operator Bharat Sanchar Nigam Limited (BSNL) earlier urged the government to allot it 700MHz spectrum through the equity route, which will help it launch 4G service in the country, allowing to compete with the likes of Airtel, Vodafone, Idea Cellular and Mukesh Ambani-led Reliance Jio. MTNL also met the IMG and sought Rs 8,000-10,000 crore capital infusion to become more competitive and agile to take on private telcos.

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