We are killing telecom in a non-conducive way: Mittal

Billionaire Sunil Bharti Mittal on Thursday said a combination of rock-bottom tariffs and high consumption is killing the telecom industry and sector regulator Trai needs to urgently intervene to strike a balance between the needs for protecting investments and consumer interest.

"...but, I think we need to have a balance between requirement of investments and consumer on the other side," Mittal, chairman of Bharti Airtel, told reporters after a pre-Budget meeting between Finance Minister Nirmala Sitharaman and corporate leaders.

"My view is Rs 200 ARPU (average revenue per user) is eventually going to Rs 300 ARPU... At the lower end, Rs 100 for a customer over a month of consuming rich data, voice and other services and on the upper end Rs 450-500... therefore, blended eventual landing point of Rs 300 a month, which will still be USD 4 a month... by far, the lowest anywhere in the world and yet consuming two or three times more data than anywhere else in the world," Mittal said.

The industry needs to get to that balance, he said adding that Trai needs to work on this as the industry "has not been able to have an orderly mechanism to get to that point".

"We are unnecessarily killing this industry in a manner and way that is not conducive for our industry, and that's why we need Trai intervention," Mittal added.

The comments of the Airtel chief come just days after the Telecom Regulatory Authority of India (Trai) initiated talks to prescribe floor price for call and data, and also deferred by one year the scrapping of the charge paid by mobile phone users for calls made to rival networks.

The two moves came as a big boost to Airtel and Vodafone Idea that are staring at a liability of thousands of crores in unpaid past statutory dues following a Supreme Court ruling. Through their association, the operators had been pitching to the government for fixing a floor rate for calls and data.

The telecom call and data rates are at present under forbearance or not regulated.

But, earlier this week, Trai released a consultation paper to fix minimum or floor rates for mobile phone calls and data, a move that will effectively end the regime of free calling and dirt cheap data.

The outcome is likely to lead to further hike in mobile call and data cost as the industry wants average revenue per user to reach Rs 300 per month from about Rs 125 at present over a period of two years -- better revenue realisation per user will offer a much-needed breather to the stressed telecom industry where debt levels have soared to Rs 7.8 lakh crore.

Bharti Airtel had posted a staggering Rs 23,045 crore net loss for the second quarter ended September 30, due to provisioning of Rs 28,450 crore in the aftermath of the SC ruling on statutory dues.

According to government data, statutory liabilities in the case of Bharti Airtel add up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is the SUC (spectrum usage charges) dues (excluding the dues of Telenor and Tata Teleservices).