A lot can change in a year, especially in the hyper-competitive telecom industry, which has witnessed severe disruption and has seen operators publicly spar against each other and with the sector regulator, since Reliance Jio’s entry in September 2016.

In yet another cruel twist of fate, incumbent telcos Bharti Airtel and Vodafone Idea, which had managed to secure a favourable verdict from the telecom tribunal against the regulator’s predatory pricing order last year, will now find themselves in a sticky situation as the same law, which they fought against, would have now come to their aid.

A little over a year ago, the Telecom Regulatory Authority of India (Trai) announced rules under which it would examine tariffs of a significant market player (SMP)—which is an operator holding a share of at least 30% of either subscriber base or gross revenue in a telecom circle—to determine the existence of predatory pricing. It would also look at whether the tariff is below the firm’s average variable cost over a certain period. If the tariff was found predatory, the operator would face a penalty.

At that time, Airtel and Vodafone-Idea were much bigger in subscriber base and revenue compared to Jio.

In the March quarter of 2017-18, Vodafone Idea had 37.5% share, Airtel 31.8% and Jio 19.8% share of the adjusted gross revenue (AGR) market across 22 telecom circles in India. In terms of user base, Jio at that time had 186.5 million users, Airtel had 304.19 million users and Vodafone and Idea together had 433.89 million users, as per Trai data.

Given that the two incumbent telcos were much bigger, they alleged that Trai’s new rules on predatory pricing were unfair and would only benefit Jio.

The Cellular Operators Association of India (COAI), without naming Jio, had even said in February 2018 that the rules seemed to strengthen the ambitions of a particular operator with deep pockets and monopolistic designs at the expense of other operators.

In December, the telecom tribunal quashed the regulation and Trai immediately appealed the verdict in the Supreme Court.

However, a year after those controversial rules were laid out, the entire industry hierarchy has changed. As of the quarter ended March 2019, Jio has more than 30% gross revenue market share in 17 out of the total 22 circles in the country. Airtel and Vodafone-Idea each have more than 30% gross revenue market share in 13 circles.

“Now, Jio has become a significant market player in many circles. Incumbent telcos were never offering tariffs below cost. But they still challenged the predatory pricing order. They moved TDSAT and that verdict favoured them. Trai then appealed at the Supreme Court. There is a stay on that order now. We can’t take any action against Jio (if it indulges in predatory pricing) because there is no law," a senior Trai official said, requesting anonymity.

COAI did not respond to an email query.

In fact, as on 31 March 2019, out of the 22 telecom circles, in terms of adjusted gross revenue, Jio has the largest market share in 16 circles, Vodafone-Idea leads in just five and Airtel in just one circle in Karnataka.

“All three private players have similar revenue market shares now. At this stage, pricing power will be a key factor to watch out for. All operators want to increase revenue, but there is no room to raise prices. Also, Reliance Jio can cross subsidize across sectors and will constantly put pressure on prices. It is also strong enough to take a short-term hit and would not let incumbents even come up for air. Incumbents are witnessing tough times and need to look at different revenue streams," said Mahesh Uppal, director at communications consulting firm ComFirst India.

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