Trai order on predatory pricing favours Reliance Jio: Vittorio Colao
, ET Bureau|
Updated: Feb 27, 2018, 02.54 PM IST
When asked if felt the latest rule favoured new players and if the company would challenge it, Colao responded affirmatively.
BARCELONA: Vodafone Group CEO Vittorio Colao has called out the telecom regulator’s new regulations on predatory pricing as favouring Reliance Jio Infocomm, and said it should be legally challenged, raising the pitch of an ongoing battle between India’s older operators on one side and the regulator and the new telco on the other.
Speaking to reporters on the sidelines of the Mobile World Congress Monday, Colao said that the regulatory environment in India continued to be “too complicated” and decision-making still slow but added that the UK telecom major will continue to compete aggressively in the South Asian market through the merger of its India unit with Idea Cellular which was on track.
Colao though lauded finance minister Arun Jaitley’s recent comments at the Economic Times Global Business Summit, that the decision to tax Vodafone Group retrospectively, taken by the UPA 2 government, was 'erroneous' and that the present government will not be going down that path.
But the latest tariff order by the Telecom Regulatory Authority of India (Trai) on predatory pricing rankled Colao.
“We believe Trai’s predatory pricing regulation favours Jio and it should be legally challenged,” Vodafone’s top executive said. “We want fair competition. We are not in agreement with that Trai regulation.”
Less than two weeks back, Trai had amended its tariff order, saying predatory pricing henceforth will be determined on the basis of average variable cost and whether there is specific intention on the part of a carrier to reduce or kill competition. It also changed the definition of significant market power (SMP), which a telco needs to have for any of its plans to be deemed predatory, to an operator with more than a 30% share by either subscriber base or gross revenue. Earlier, the SMP parameters included volume of traffic, including data, and switching capacity.
India’s older operators Bharti Airtel, Vodafone India and Idea Cellular, through industry body Cellular Operators Association of India (COAI), and analysts have said that Trai’s latest rules favour Jio. COAI has also warned of moving court against the order and urged urgent government intervention. Trai and Jio have termed COAI’s charges as baseless, with the regulator saying the aggrieved carriers are free to go the legal route. Jio has also threatened legal action against COAI and its director general Rajan Mathews for defamatory and malicious allegations, unless they apologize.
In a note to clients, brokerage BNP Paribas said the tariff order “restricts predatory pricing by players with more than 30% subscriber/revenue market share (read: Bharti Airtel, Idea-Vodafone combine) but puts no restrictions on promotions of Jio (with 13-14% share), which is the dominant player in data with four times more volumes than Bharti or Idea-Vodafone”.
(The reporter is in Barcelona to cover the Mobile World Congress at the invitation of Huawei.)
Speaking to reporters on the sidelines of the Mobile World Congress Monday, Colao said that the regulatory environment in India continued to be “too complicated” and decision-making still slow but added that the UK telecom major will continue to compete aggressively in the South Asian market through the merger of its India unit with Idea Cellular which was on track.
Colao though lauded finance minister Arun Jaitley’s recent comments at the Economic Times Global Business Summit, that the decision to tax Vodafone Group retrospectively, taken by the UPA 2 government, was 'erroneous' and that the present government will not be going down that path.
But the latest tariff order by the Telecom Regulatory Authority of India (Trai) on predatory pricing rankled Colao.
“We believe Trai’s predatory pricing regulation favours Jio and it should be legally challenged,” Vodafone’s top executive said. “We want fair competition. We are not in agreement with that Trai regulation.”
Less than two weeks back, Trai had amended its tariff order, saying predatory pricing henceforth will be determined on the basis of average variable cost and whether there is specific intention on the part of a carrier to reduce or kill competition. It also changed the definition of significant market power (SMP), which a telco needs to have for any of its plans to be deemed predatory, to an operator with more than a 30% share by either subscriber base or gross revenue. Earlier, the SMP parameters included volume of traffic, including data, and switching capacity.
India’s older operators Bharti Airtel, Vodafone India and Idea Cellular, through industry body Cellular Operators Association of India (COAI), and analysts have said that Trai’s latest rules favour Jio. COAI has also warned of moving court against the order and urged urgent government intervention. Trai and Jio have termed COAI’s charges as baseless, with the regulator saying the aggrieved carriers are free to go the legal route. Jio has also threatened legal action against COAI and its director general Rajan Mathews for defamatory and malicious allegations, unless they apologize.
In a note to clients, brokerage BNP Paribas said the tariff order “restricts predatory pricing by players with more than 30% subscriber/revenue market share (read: Bharti Airtel, Idea-Vodafone combine) but puts no restrictions on promotions of Jio (with 13-14% share), which is the dominant player in data with four times more volumes than Bharti or Idea-Vodafone”.
(The reporter is in Barcelona to cover the Mobile World Congress at the invitation of Huawei.)
