Tariff at current level not sustainable, must go up, says Airtel CEO

Gopal Vittal, Chief executive officer, Bharti Airtel
Making a pitch for higher tariffs, Bharti Airtel Chief Executive Officer Gopal Vittal on Tuesday said that the rates at the current level were “unsustainable” and should go up. Speaking on the interconnect usage charges (IUC) he said that the industry is awaiting the outcome on the consultation paper floated by the Telecom Regulatory Authority of India (TRAI) on the subject.

“Over the last 20 years IUC has been absorbed in the cost of business and tariff is what it is and we feel that the tariff is unsustainable and should go up,” Vittal said on the sidelines of India Mobile Congress.

Vittal refused to comment on whether the company was planning to increase tariffs, “I will not speculate on our future plans,” he said.

The debate on IUC started after TRAI came out with a consultation paper on IUC and sought stakeholders’ comments for extension of the levy. Earlier, the regulator had said that the levy would be brought down to zero, from current 6 paise per minute, from January 2020.

Following the regulator’s consultation paper, Reliance Jio announced transferring the IUC to its customers in the form of a levy over and above the tariff, however, with a rider that the users would be compensated with data of the same amount.

The company also said that the IUC levy would be removed if TRAI decides to bring it down to zero.

Current customers when they recharge as well those joining the Jio network from Thursday will have to top up with Rs 10 to Rs 100 to pay for (IUC). They will, however, get an equivalent amount of free data — 1 GB to 10 GB. 

This will help Jio save Rs 650 crore in the coming quarter. It had paid Rs 851 crore to Airtel, Vodafone Idea and Bharat Sanchar Nigam Ltd last quarter as IUC.

TRAI in 2017 had slashed the IUC to 6 paise per minute from 14 paise and had said this regime will end by January 2020. But, it has now floated a consultation paper to review whether the regime timeline needs to be extended.

Meanwhile, on the spectrum auctions front, Vittal reiterated that the reserve prices for both 5G spectra and 700 MHz were very high. But declined comment when asked whether the company would participate in the bidding.

“We have always said that the price of 5G spectrum is very high because 5G needs a lot of spectrum – somewhere between 80 to 100 MHz for you to get a good experience. The cost of 100 MHz of spectrum is around Rs 50,000-55,000 crore i.e. that is a very high cost,” he told reporters here.

When asked whether the base price of 700 MHz spectrum, reduced by TRAI, was still on the higher side, he said, “Not just 5G but the sub-gigahertz bands were also very high …the reserve price has come down a little bit but it is still very very high.”

Not just Bharti Airtel but even Vodafone-Idea and Reliance Jio have said that the TRAI reserve prices for the proposed spectrum auctions were very high.