Mumbai/New Delhi:The Indian government is working on a new policy to encourage capital spending and restore the financial health of mobile phone operators battered by a bruising tariff war, telecom secretary Aruna Sundararajan said.
Public consultation will begin by year-end and cabinet approval is expected by March, she said in an interview in New Delhi, declining to share details. Voicing a key industry demand, billionaire Sunil Mittal, who controls No. 1 operator Bharti Airtel Ltd, said on Thursday that policy makers should reconsider norms which effectively charge companies twice for spectrum. The price war may continue through the first half of 2018, he said.
“We are certainly looking at how we can have a healthy sector, how we can have ease of doing business, how operators can be incentivised to make necessary investments," Sundararajan said. “The really long-term plan for the sector will emerge from the contours of the new telecom policy."
Any relief will be welcome in a sector grappling with the entry last year of India’s richest man, whose Reliance Jio Infocomm Ltd offers free voice and cheap data services. Rivals have been forced to merge or exit, whittling down the number of operators in the world’s second largest mobile market from a dozen early this year. As few as four may eventually remain, Sundararajan said.
The government should not charge twice for spectrum through revenue sharing and a ‘spectrum usage charge’ after operators have already paid at auctions, Bharti Airtel’s Mittal said at an event in New Delhi. “It’s like you sell something and then start collecting rent on it."
Adjustments such as giving operators more time to make spectrum payments to the exchequer were recommended recently by a government panel.
Major policy changes, however, should be avoided as the industry needs consistency, said Rajan Mathews, director general of the Cellular Operators Association of India (COAI). More than $20 billion in spending will probably be required for network upgrades in the initial phase with about half of that starting next financial year as companies look toward fifth-generation services, he said.
Smaller players have struggled with Reliance Communications Ltd posting its first full year of loss this March and defaulting on a dollar bond payment. Aircel Ltd too missed a payment. Vodafone Group Plc.’s India unit and Idea Cellular Ltd are merging to create the nation’s largest operator, while Bharti has been mopping up embattled rivals.
Synergies between the two state-run carriers — Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) — are also being discussed to help them compete, Sundararajan said. Monetizing BSNL’s mobile phone towers was another step aimed at improving its financials, she said.
“I really don’t see this as a crisis situation," said Sundararajan. “One of the priorities is to ensure the health of the sector is robust going forward. With the current wave of consolidation, we’ll have solid players with the wherewithal." Bloomberg