Telecom war to get nastier
Bharti Airtel chief, Sunil Mittal has openly criticized TRAI's regulation on pricing and said that he will contest the order in court if the regulator does not provide a fair business environment to all telecom operators.
Mittal was speaking at an international forum, the Mobile World Congress in Barcelona. On February 19, TRAI has notified amendments to the Regulatory Principles of Tariff Assessment, which has tweaked the definition of predatory pricing and significant market power (SMP). Mittal alleges that these norms were tweaked to favour Reliance Jio.
The government in its push for digitalization is desperately wanting to make telecom and data accessible to all and thereby giving leeway to predatory pricing. The competition in India's telecom sector is almost war-like marred with abrupt exits like that of Telenor India and consolidation among players like Idea Cellular and Vodafone merger. The war is between Reliance Jio at one end and the rest on the other side. The most recent victim of Reliance Jio's pricing strategy is Aircel, which has reportedly filed for bankruptcy in NCLT on Wednesday. Mittal has ruled out the possibility of his company acquiring Aircel.
Telecom Regulatory Authority of India’s new regulations gives pricing flexibility only to operators who have less than 30 per cent of subscribers or revenue in a market. According to the regulation, an operator shall be deemed to have to have significant market power (SMP) if it holds a share of 30 per cent. Generally, pricing is considered predatory when SMP sets a very low price which reduces competition or eliminates competitors or becomes a barrier to entry for new players. But with the tweaking of the SMP norm, the price discounts offered by Reliance Jio cannot be considered predatory pricing or in other words pricing below the cost, as is alleged by Airtel.
Meanwhile, the stock of Bharti Airtel was trading at Rs. 434.40 per share, up by 1.65 per cent and Idea Cellular was at Rs. 83.05 per share, up by 0.78 per cent at 11:58 hours, on Thursday.