NEW DELHI: The Digital Communications Commission (DCC) is slated to meet today to deliberate on penalties worth Rs 3,050 crore imposed on telecom majors Bharti Airtel and Vodafone Idea for flouting interconnect regulations. The DCC will also discuss the reserve pricing set by the Telecom Regulatory Authority of India (TRAI) for the next round of spectrum auctions.
Any decision on either issue will have significant consequences for the industry, which has been struggling to maintain margins amidst a prolonged price war and high capex requirements. In FY19, Bharti Airtel recorded 63 per cent drop in net profit, while Vodafone Idea posted a whopping `14,571 crore net loss.
In October 2016, TRAI had imposed penalties on Bharti Airtel, and then seperate entities Vodafone India and Idea Cellular, for not providing enough interconnect points to new entrant Reliance Jio. These fines, at `50 crore per circle, accumulated to `1,050 crore each for Bharti Airtel and Vodafone (21 circles) and `950 crore for Idea Cellular (19 circles). The recently merged Vodafone Idea is now liable to pay a cumulative `2,000 crore.
The DCC had given its nod for the penalties in June, but asked TRAI to reconsider the quantum of fines, considering the financial distress afflicting the industry. However, the regulator has stuck to its guns so far, with officials noting that it cannot revise the quantum of penalties since it is bound by regulations.
For its part, the Cellular Operators Association of India (COAI), an industry lobby representing Indian telcos except for Reliance Jio, has questioned the basis of TRAI’s findings. The number of interconnect points to be provided was itself an issue under litigation, said COAI president Rajan Mathews, who also dismissed TRAI’s finding that Quality of Service (QoS) deteriorated due to lack of interconnect points.