Rel Jio Pricing Not Predatory Scope For More Cuts

Rel Jio pricing not predatory, scope for more cuts

Competition Is Good, Not Allegations And Mud-Slinging

Telecom secretary J S Dee pak does not find free-vo ice plans of Reliance Jio as predatory . Rather, he expects competition to bring down mobile tariffs further.With the mega spectrum auction set to begin from Saturday , Deepak tells TOI that the telecom industry should refrain from infighting and focus on airwave sale and quality of services. Excerpts:

How do you see the spectrum auction this time around? The government has put up a record amount of bandwidth for sale.

We are putting a lot of spectrum on the table for operators.Basic USP of this auction is that it will end the spectrum scarcity in India once and for all.

Companies say their balance sheets are stretched, even though some such as Vodafone and Airtel have infused fresh capital. The industry has high debt. Do you think a staggered auction could have been better than a big-bang sale?

We are selling over 2,300 MHz of spectrum, which is more than what the top four operators hold cumulatively . It is obvious that the spectrum will not be sold completely . We expect that a lot of it will be sold.The idea is to give the operators a choice. Had we released less, we could have been criticized for trying to create an artificial scarcity to push up prices.

Do you think the industry is healthy enough to bid aggressively and buy?

The industry has been ma king profit, ebitda margin has been improving, many of them have brought in fresh equity to boost capacity to raise funds. So, I would say that the capacity of the industry to raise money is better than what it was three years back.

Some say the government is looking to make undue profit by keeping reserve prices high, especially in the 700-MHz band?

If the government was keen to make undue profit, it would not have put so much spectrum on the table. After all, an auction is all about demand and supply.

So companies cannot hide behind the excuse of bandwidth scarcity for poor consumer services.

Absolutely. There can be many reasons for poor quality of services and spectrum is one of them. But after this auction, spectrum ceases to be a reason or an excuse. The other reason for poor services is lack of infrastructure. Telcos need to invest more for towers.

Do you think industry should refrain from in-fighting, hurling accusations and allegations?

While competition is good, allegations and mud-slinging are not. There can be no two opinions about that. This kind of upheaval is bound to happen whenever a big player enters the market. We have seen this before in the telecom sector. So, I am not surprised. I am sure that it will subside in due course of time.

Pricing of Jio and free-voi ce offer is being seen as predatory by some, considering that 70% of the industry's revenues currently come from voice. Do you call it predatory pricing?

India is a huge market and telecom is an industry of scale. The economies of scale permit tele com services at very low costs.Low prices to the consumer will not necessarily mean that companies are bleeding.

So you don't see a case of predatory pricing by Jio?

Predatory pricing is different. Low prices can also sustain profit and growth in the telecom sector because of the scale and huge market, and due to efficient technology , good policy and regulations.

Can we expect tariffs to come down further?

Absolutely. The consumer is likely to get the best deal when efficiencies are driving down costs for the operators.

  

(TOI)