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Government wants fair competition, will not encourage monopoly: Prasad to telco CEOs

The telecom sector is burdened with staggering debt levels and cut-throat competition since 2016 when Reliance Jio stormed into the market and offered lifetime free calls and dirt cheap data.

Published: 27th July 2019 10:19 PM  |   Last Updated: 27th July 2019 10:19 PM   |  A+A-

Union Law and IT Minister Ravi Shankar Prasad

Union Minister Ravi Shankar Prasad (File | PTI)

By PTI

NEW DELHI: The government on Saturday made it clear to the telecom industry that it wants fair competition and will not encourage monopoly as it asked telcos to keep a razor-sharp focus on improving service quality to consumers and ensure robust participation in India's 5G blueprint and USD 5 trillion economy goal.

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Telecom Minister Ravi Shankar Prasad met CEOs of telecom companies including Bharti Airtel, Reliance Jio, Vodafone Idea and state-owned Bharat Sanchar Nigam Ltd to listen to their business concerns and has, in turn, assured Telecom Department's full support in resolving outstanding issues through cut in levies and release of input tax credit that is locked up.

The meeting, which went on for over one hour, was attended by Bharti Airtel CEO Gopal Vittal, Vodafone Idea CEO Balesh Sharma, Reliance Jio board member Mahendra Nahata and BSNL chairman P K Purwar.

Speaking to reporters after the meeting, Prasad said, "I highlighted to them, the need for a robust involvement of the industry in 5G innovation, startups and creation of 5G products that can create India-specific patents. I said that in the USD 5 trillion economy target, 25 per cent should be telecom's sector's contribution".

Prasad's first interaction with the industry after he took charge of the telecom portfolio comes at a time when the sector is reeling under severe financial stress with cumulative debt of over Rs 7 lakh crore.

Prasad said that he has already taken up with finance ministry some of the outstanding issues such as release of input tax credit that is pending and lowering of GST rate and added that a proposal pertaining to reduction of Universal Service Obligation (USO) levy is also under the telecom department's consideration.

"From our side, we have conveyed what we have done for them...in particular you are aware I have written that inputs tax credit set off is pending and I have written to Ministry of Finance. I have also written to them for reduction of GST to 12 per cent from 18 per cent. On USOF reduction, TRAI has given recommendation and a committee will take a call," Prasad said.

Prasad has also asked telecom companies to prioritise quality of telecom services.

ALSO READ: Telcos hope new government will lift burdensome levies

"Also 43,000 villages are unconnected at present. I have told the industry to pool in their resources so that in one year, we can reach all the uncovered villages and they have agreed. Department of Telecom (DoT) will provide all assistance," Prasad promised.

Asked if spectrum prices - considered to be exorbitant by most players - came up for discussion, the minister said that while the industry did talk about it there is a committee which is looking into the matter.

The minister also asked the companies to look at improving connectivity and digital ecosystem in religious sites like Kedarnath and Badrinath.

These locations get millions of visitors and need improvement in connectivity and digital solutions, he pointed out.

The minister assured the industry of government support on the issue of installation of telecom towers and directed Department officials to ensure a fair system that would enable optimum use of government buildings to improve telephony services.

The industry flagged the issue of lapsed bank guarantees which they want returned and the ministry has asked the DoT to urgently look into the matter.

"I have assured the industry three things...We want a fair competition. The government will not encourage any monopoly and will do its best for ease of doing business," Prasad said.

The Minister also asked players to sort out disputes and litigations. The telecom sector is burdened with staggering debt levels and cut-throat competition.

Competition has only intensified since 2016, when Reliance Jio, owned by richest Indian Mukesh Ambani, stormed into the market and offered lifetime free calls and dirt cheap data.

Jio's offerings forced rivals to slash rates, affecting profit margins. Since the launch, rivals have either teamed up via merger, resorted to acquisitions or folded up.

The financially stressed industry has been asking for a breather in the form of cut in levies including licence fee, spectrum usage charges.

After the meeting with the telecom minister, India's largest mobile operator Vodafone Idea CEO Balesh Sharma told reporters that the company favours 35 per cent cap for 5G spectrum bands to ensure fair competition.

"On 5G, our specific request has been there has to be a fair playing field. Therefore with four operators in the country, we should look at a cap of 35 per cent maximum on every band so there is a fair competition and everybody plays fair," Sharma said.

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