Birla ready to give up on Vodafone Idea, TRAI against floor pricing, more

Birla Vodafone Idea
Is Vodafone Idea on its last legs? Image by romavin | Bigstockphoto

Vodafone Idea’s fate seems to be hanging by a thread. Its chairman, Kumar Mangalam Birla, has officially conveyed to the Indian government that the telco’s Indian promoter, Aditya Birla Group (ABG), is willing to give up its stake to any public or private entity to keep the stressed telecom company afloat.

“It is with a sense of duty towards the 27 crore [270 million] Indians connected by ViL, I am more than willing to hand over my stake in the company to any entity, public sector, government domestic financial entity, or any other, that the government may consider worthy of keeping the company as a going concern, Birla said in his recent letter to Rajiv Gauba, Cabinet Secretary. 

Fearing a collapse of Vodafone Idea, Birla said that his team would be “more than happy” to work with the government to urgently explore all possible options and solutions to save the company and strengthen it in the national interest without any consideration of our private interest.

UK’s Vodafone Group Plc and the Aditya Birla Group own 44.39% and 27.66%, respectively.

In his letter, Birla reiterated the need for urgent measures from the government, including the floor pricing regime.

Interestingly, the Indian telecom regulator has rejected the demand by the telecom operators, especially Vodafone Idea, for fixing a floor price for voice and data tariffs. As per media reports, the Telecom Regulatory Authority of India (Trai) will not fix a floor price for mobile tariffs since it would be objected to by the Competition Commission of India (CCI).

The telecom regulator reportedly conveyed to the telecom operators that the government and the private industry should work together to overcome the ongoing financial problems.

The regulator, however, recently recommended reducing the licence fee from 8% of the AGR of the operators to 6% by reducing the 5% universal service obligation levy by two percentage points. The Indian government is yet to decide on these recommendations.

Telecom operators have themselves taken some steps to improve their financials. Both Vodafone Idea and Bharti Airtel have hiked tariffs for corporate postpaid users and entry-level prepaid users.

While “long-term measures” to improve the financial state of the telecom sector is in the works, the Department of Telecommunications (DoT) is preparing to seek a fresh base price from the TRAI for spectrum in the  600 Mhz and 700 Mhz bands, 3300-3750 MHz and 24-28GHz bands, which can be used for 5G services.

The regulator had in 2018 recommended a base price of $67.4 million per unit for spectrum in the 3300-3750 MHz band, earmarked as anchor band for 5G services.

Indian telecom operators had previously told the government that the base price for 5G spectrum in the mid-band and the 700 MHz band is too high. The 700 MHz band went unsold for the second successive auction in March because of its high floor price.

They have already warned that the upcoming 5G spectrum auction could fail if the Indian government doesn’t reduce the base price for spectrum earmarked for high-speed internet services.

“TRAI will be asked to give a base price for all the spectrum available with the DoT, including the airwaves in the 5G band of 3300-3750 Mhz band for which Trai had given a base price in 2018,” a senior government  official was quoted as saying by the Economic Times.

While the policy-related battle continues in the Indian telecom market, Airtel on Monday claimed that it had become the market leader in the fast-growing Cellular Internet of Things (IoT) space with a market share of 45.5%, citing data from Frost & Sullivan’s latest Enterprise Mobile Services Report.

The report also revealed that Airtel’s enterprise business arm remains the market leader in the “Enterprise Mobility Space” with a Revenue Market Share (RMS) of 43.3%.

Airtel claimed that it currently supports over 6 million managed IoT connections, including vertical-specific solutions such as industrial asset monitoring, smart metering, and vehicle telematics.

“MG Motor, Pine Labs, Paytm, Kirloskar, BSES, Genus, Kent, Black Buck, Meghalaya Power Distribution Corporation Limited and Odisha Power Transmission Company are among the enterprises that are already using Airtel’s IoT solutions,” the Sunil Mittal-led telco said in a statement.

Airtel has also bagged a  new deal from Meghalaya Power Distribution Corporation Limited, under which it will power 200,000 smart meters with its 5G ready IoT SIMs that will remotely transmit customers usage of energy in near real-time cutting costs and helping to balance supply and demand.

The Indian IoT market is expected to grow at a CAGR of 8.8% by the year 2023. “Airtel IoT is built to massively simplify the IoT journeys of emerging enterprises. We continue to invest in our platforms by enabling technologies that are central to the functioning of the Internet of Things, including our 5G network,” Ajay Chitkara, Director & CEO – Airtel Business, said in a statement.

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