Older telcos have no choice but to move court: Sunil Mittal

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BARCELONA: Sunil Mittal, chairman of India’s top telco Bharti Airtel, said operators have no choice but to move court against the regulator’s order on predatory pricing, which prevents them from retaining customers and conducting business, a right enshrined in the Constitution.

Mittal also ruled out an acquisition of Aircel and told reporters at the Mobile World Congress in Barcelona that the struggling carrier was shutting down operations across India after the promoters halted funding for the company.

Operators are bitter about the Telecom Regulatory Authority of India’s new regulations on predatory pricing, which they say favour Reliance Jio Infocomm, the latest entrant in the market. Jio and the regulator have termed the accusations baseless.

Trai Chairman RS Sharma, who is also in Barcelona, said on Tuesday that the telcos are free to go to court and contest the order. “We have heard Trai’s response and since the order binds us from conducting our business in an orderly manner, I cannot envisage anything other than a legal challenge to counter this order,” Mittal said. “We believe we must be provided with the rights to conduct our business in the marketplace. That is enshrined in the Constitution, under Article 14. We will agitate at the appropriate forums to have the freedom to do it.”

Mittal added that a telco cannot operate with its hands tied. His statement follows similar comments by Vodafone Group CEO Vittorio Colao. Trai’s order of February 16 gives pricing flexibility only to operators with less than 30% of the market’s subscribers or revenue.

It said predatory pricing will be determined on the average variable cost of a carrier. The regulator changed the definition of significant market power (SMP) to a company with more than 30% of the users or gross revenue share and junked norms including volume of traffic and switching capacity. It said telcos cannot offer pricing packages to individual subscribers to retain them and must offer all customers the same tariff plan.

“If you are my customer and I need to hold you back, then I must have the right to do so with whatever tools I have,” Mittal said. The telcos say the order favours Jio and they would not be able to compete without falling foul of the new definition of predatory pricing and SMP. Jio has 13-14% share of revenue and users, while Airtel and the Vodafone-Idea Cellular combine would each have over 30% revenue market share.

Competitive pressures and near-zero tariffs following Jio’s entry have pushed the industry to consolidation, shrunk revenue and eroded profits, forcing promoters to pump in more money into operations. Singapore Telecommunications (Singtel), the largest shareholder in Bharti Airtel, invested Rs 2,649 crore in the company earlier this month. “Singtel, even in this otherwise difficult environment in the Indian telecom industry, has absolute confidence in Airtel and stands behind it like a rock. This should give lot of assurance, reassurance to lot of stakeholders,” Mittal said.

Airtel has been paring its stake in tower unit Bharti Infratel to raise funds and said it’s open to an exit as well. Merging Indus Towers, in which Infratel has a 42% stake, with Bharti Infratel was a possibility, although there is no time line for such a deal, said Akhil Gupta, chairman of Infratel.

On acquisitions, Mittal said there is no company left in India to buy, not even Aircel. “Aircel is no longer an option for Bharti. It is shutting down, switching off networks everywhere. Banks will want to sell their assets at some point of time. But Aircel is no more an entity to be taken up. If you’ve heard, the promoters of Aircel have said, ‘We’re done, we’ve handed over the keys,’” he said.

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