Vodafone Group Plc chief executive Vittorio Colao has solicited the Indian government to lower the interest rates on deferred spectrum payments and appealed that the mobile termination charges (MTC) do not reduce further. Without mentioning Reliance JIo, Colao also said TRAI shouldn’t biased with new competitors.
In a letter dated August 22, a copy of which is available with IANS, Colao has written to Communications Minister Manoj Sinha said, “We hope that the IMG will recommend a reduction in the interest rates for deferred spectrum payments to 6.25 percent in line with the improved macroeconomic trends and an increase in the period of payment for spectrum”.
The letter mentions:”On mobile termination charges, we are seriously alarmed to see reports that the Regulator is considering a reduction in MTC at a time when the industry is facing such immense hardships. Any reduction in MTC risks large-scale site shut-down of already unprofitable sites in rural India and which would greatly diminish the population coverage of mobile telephony.”
Colao’s letter follows an identical move by Bharti Enterprises chief Sunil Mittal and Aditya Birla group Chairman Kumar Mangalam Birla, whose company Idea cellularly is in the process of merging with Vodafone India’s operations.
After the competitive entry of Mukesh Ambani’s Reliance Jio in September last year on the free voice and crippling tariff plan the deprivation of the older telecom companies began.
Vodafone said, adding that at present the industry covers 97% of the population,”any reduction in MTC risks large-scale site shut-down of already unprofitable sites in rural India and which would greatly diminish the population coverage of mobile telephony.”
Attributing the success in taking telecom services to rural areas to the adoption of Calling Party Pays (CPP) norm in 2003, Colao said nowhere in the world does Bill and Keep (BAK) and CPP regime that existed together, as proposed by Jio.
The letter also said that Jio claims of having a 70 percent advantage on costs as compared to entrenched operators has “no evidence” and alleged that Jio is incurring higher costs on both employees and infrastructure.
The letter warned, “It is undesirable for a critical core industry like telecom to be regulated based on the ambition of a new operator with no history of financial sustenance”. The Vodafone Group CEO’s letter also mentions the firms’ commitment to the governments Digital India vision.