Airtel chief’s comments on floor price validate Trai stance: Official

Bharti Airtel chairman Sunil Bharti Mittal’s comments that the industry does not need regulatory intervention for pricing has validated the telecom regulator’s stance that setting up floor tariffs was not a feasible idea, a senior official said.

“We were always of the opinion that setting up a floor for tariff would not be feasible. This is a cumbersome process,” the Telecom Regulatory Authority of India (Trai) official told ET.

Mittal said that Thursday said that the regulatory intervention on fixing a floor price was not necessary, indicating a change in the mobile phone operator’s previous stance.

Backing Aditya Birla Group (ABG) chairman Kumar Mangalam Birla’s views on setting up a floor price, the Cellular Operators Association of India (COAI) recently said that in the last few years, fixing floor price had become critical to provide the telecom industry some relief from cost pressures and financial stress. COAI represents all three private telcos – Airtel, Reliance Jio and Vodafone Idea.

“The Cabinet-approved relief package is more important than seeking a floor price that may only be done in a scenario when the financial health of all telcos remain in bad shape,” the official said. The telecom tariffs are currently under forbearance.

The official further said that fixing up a floor for tariff being a complex process, it requires in depth analysis of the current market situation, and needed a consultation with the Competition Commission of India (CCI).

He added that the reforms announced would be good for a large country like India as it may attract new players and promote competition.

Setting a floor price has been a bone of contention between telecom service providers and the sector regulator for some years now, with telcos saying a minimum price was a must to stop the brutal tariff cuts which was hurting the industry. But the regulator has been pushing back, saying it was an anti-consumer move.

But, speaking to reporters on Thursday, Mittal said that the telcos should work towards raising prices, without regulatory intervention, as the industry needed to “heal”. He added that the policy of forbearance has worked to the benefit of consumers and other industries.

Incumbents such as Bharti Airtel and Vodafone Idea have in the recent past revised their base-level retail tariff and corporate postpaid plans to push users onto higher paying plans, in a bid to shore up their average revenue per user.

Mittal added that Airtel could take the lead in pushing prices higher in some areas.