Did Reliance Jio's free offers cost the Indian govt Rs 800 crore?

BT Online   New Delhi     Last Updated: March 2, 2017  | 18:31 IST
Did telcos' free offers cost the Indian govt Rs 800 crore?

Reliance Jio's promotional offers may not be 'predatory' but the tariff-war triggered by it seems to have robbed the government of almost Rs 800 crore in revenue.

And, this is what prompted Telecom Secretary JS Deepak to write to the Telecom Regulatory Authority of India (Trai) asking it to restrict the period of 'promotional tariffs' offered by telecom companies.

Economic Times on Thursday reported that the Telecom Secretary has written to Telecom Regulator for restrictions on promotional offers which can stretch up to 90 days.

Deepak wrote to Trai chairman RS Sharma on February 23. In his letter Deepak explains how the government revenues from just the licence fee have fallen from Rs 3,975 crore in the June quarter to Rs 3186 crore in the December quarter of the current financial year

The government collects licence fees and spectrum usage charges from operators, which are calculated on the basis of their revenue. Jio's free offers forced Bharti Airtel, Vodafone India and Idea Cellular to bring down their charges, leading to a drop in their revenue.

"There appears to be an urgent need to revisit and review its tariff orders in the larger interest of the government revenues as well as the telecom sector," ET quoted Deepak as saying.

The Telecom Secretary's letter endorses the view of other telecom service providers who have been opposing Reliance Jio's free voice and data plans. The disruption began when the Mukesh Ambani announced the Welcome Offer which later turned into Happy New Year offer in December.

Airtel chief Sunil Bharti Mittal had called Mukesh Ambani's promotional offers as 'predatory'. Not only this, he also filed a complaint with the Competition Commission of India or CCI accusing the Mukesh Ambani-led firm of anti-competitive behaviour.

"There is an impact on the whole industry. Anything being offered free would have an impact on revenue and margins. This is unfair competition," Sunil Mittal had said.

Under pressure from Jio's free data and voice plans, Airtel slashed its data charges heavily and offered multiple offers to match Reliance Jio's offers.

However, it did not go well with Airtel's balance sheet and it reported over 54 per cent fall in net profit to Rs 503.7 crore for October-December quarter of 2016.

According to reports, the Telecom Commission - the highest decision-making body for the sector - has communicated to the Trai the ''urgent need'' to review its tariff orders and directions.

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