Prasad Refuses To Intervene In Raising Tariffs

Telecom Minister Ravi Shankar Prasad has reportedly refused to entertain loss-making Vodafone Idea’s plea seeking his intervention in increasing tariffs, saying the telco should take measures internally to deal with fierce competition.

Prasad further clarified that tariffs were not under the domain of the Department of Telecommunications (DoT) and is the prerogative of the Telecom Regulatory Authority of India (Trai), there wasn’t anything he could do about it.

“In a recent meeting with the minister, Vodafone Idea top executives, including chairman Kumar Mangalam Birla and CEO Ravinder Takkar, highlighted the cash flow challenges faced by the telco, and how a rise in tariffs could turn the sector around, and help the telco as well,” a person aware of the development told a leading business daily.

It is worth noting that Birla and Takkar met the telecom minister last month, after Balesh Sharma resigned as the company’s CEO. The company, however, described the meeting as a “courtesy meeting”.

The minister acknowledged that the telecom sector was under acute financial distress with massive debt and declining revenue.

Vodafone Idea’s market cap has dropped over 20 percent, or over Rs 6,000 crore, and its stock price by 81 percent, since August 31, 2018, the day the integration process closed and Sharma took over as CEO. The telco’s net loss narrowed to Rs 4,873.9 crore for the April-June quarter. It had reported Rs 4,881.9 crore loss during the fourth quarter of 2018-19.

Separately, the financial daily earlier reported that Prasad wrote to Finance Minister Nirmala Sitharaman, urging for steps to alleviate the payout burden on the ailing industry by cutting levies such as licence fees and Goods and Services Tax (GST). He also sought the Rs 36,000 crore accumulated as input tax credit collected from the mobile operators to be adjusted against future GST charges. Prasad also proposed a cut in the GST rate, first to 12 percent and then slashing it further, from the current 18 percent.

At present, Reliance Industries’ telecom unit Jio Infocomm is the only profitable telecom entity in India, with both Vodafone Idea and Bharti Airtel in the red.―Times Now