In Big Push for Revival of Telecom Sector, Govt Mulls Minimum Price for Calls, Data

In a move that could potentially thaw the frigid state of India’s now-turned dormant telecom sector, the committee of secretaries (CoS) is mulling over setting a minimum price for mobile calls and data, a CNBC-TV18 report said.

Sources aware of the development have confirmed to CNBC-TV18 that the committee has sought recommendations from Department of Telecom (DoT) on setting a minimum charge for all tariffs for telecom players, while also assessing the impact it will have on telecom operators.

This move will be beneficial for incumbents like Vodafone Idea and Bharti Airtel who reported a combined loss of RS 74,000 crore for its second quarter ended September 30, 2019 results after the Supreme Court asked telecom companies to pay Rs 92,000 crore to the government as Adjusted Gross Revenue (AGR).

"The committee has asked DoT to suggest a floor price that has the least on consumers and at the same time ensures that voice and data volume continues to rise at the current pace:" the report quoted a source.

Sources add the DoT, in its consultation paper, will seek to asses multiples points, including the minimum charge that should be set, the rationale and the financial benefit it will have on telecom operators.

On Thursday, Vodafone Idea said it plans to sell its 11.15% stake in mobile mast operator Indus Towers once its merger with Bharti Infratel receives regulatory clearances.

Bharti Airtel's MD and CEO, India & South Asia, Gopal Vittal said: "We continue to engage with the government and are evaluating various options available to us."

"We are hopeful that the government will take a considerate view in this matter given the fragile state of the industry," Vittal said.

Analysts on average expected Bharti Airtel to report a loss of 11.16 billion rupees for the three months to the end of September, according to Refinitiv data.

Bharti, which runs operations in South Asia and Africa, said its Indian revenue rose 3% year-on-year to 153.61 billion rupees.

Earlier on Thursday, Singapore-based Singtel posted a second-quarter loss of S$668 million ($491.29 million) hurt by a one-time charge recorded by Bharti.

Singtel is the biggest shareholder in Bharti Airtel, with an effective stake of about 35%.