After Vodafone Idea, Airtel’s Sunil Mittal raises low mobile tariff issue

After Vodafone Idea, Bharti Airtel has raised the issue of extremely low mobile tariffs currently prevalent in the industry and sought the government’s intervention in the matter. According to sources, Bharti Enterprises chairman Sunil Mittal met communications and IT minister Ravi Shankar Prasad on Friday and highlighted the issue while seeking support from the government. But the minister is believed to have told Mittal that the government can’t intervene in the matter as the mandate regarding tariffs lies with the Telecom Regulatory Authority of India (Trai), which is an autonomous body. The minister also told Mittal that all the operators should sort out the issue among themselves.

When asked about the meeting, Prasad told Financial Express that Mittal met him and raised the issue of financial stress in the telecom sector. He, however, did not elaborate further. The minister though said that to ease the stress, he has already written to the finance ministry.

Mittal did not offer any comment to FE regarding his meeting with the minister. Mittal is not the first one to seek the government’s help in raising tariffs. Last month, Vodafone Idea chairman Kumar Mangalam Birla, along with CEO Ravinder Takkar, had met the minister and explained how below-cost tariffs are hurting the company. The top executives highlighted cash-flow challenges being faced by the company and how an increase in tariffs would help. Prasad told them that he could not intervene in the matter related to tariffs.

“The minister feels that in a competitive world, the government can’t set the tariffs. The operators have to compete and sort the matter among themselves,” sources said. To ease the stress, Prasad has sought reduction of the GST on telecom to 12% from the current 18%. He has also urged to offset spectrum and other payments by telecom operators against the Rs 35,000 crore worth of input tax credit lying with the government.

Apart from that, Prasad has requested to reduce the ‘universal services obligation fee’ (USOF) to 3% from the current 5%. The reduction in USOF will effectively reduce the licence fee to 6% from 8% currently.

IDEA Cellular Limited