Bharti Airtel May be Slapped with Another Penalty of 650Cr and Impact

In its ongoing hate and love with Indian regulators, Bharti Airtel may be slapped with another fine of 650Cr for its violation of subscriber local dialling (SLD) based on PTI reports. Telecom ministry blamed Bharti Airtel that Bharti unabatedly offered national and international dialling service as local call even though DoT warned Bharti Airtel in 2003 but Bharti Airtel continued the service till 2005 inflicting heavy loses to BSNL and government exchequer. I am surprised to see the potential upcoming fine. Recently, DoT slapped 350 Cr fine on Bharti Airtel for 3G roaming violation. Two fine is more or less equal to last two quarter profitability. In ongoing situation of legal and regulatory bottleneck, I don’t see FDI would flow back in Indian Telecom Sector

Any BWA spectrum refund to Indian PSU’s would justify same demand from Private players

In continuation to earlier post regarding “India Mulling FDI Limit Removal in Telecom Sector – Should Government focus Policy Clarity &Implementation OR FDI?”; Indian Telecom sector started experiencing another concern. Major Telecom players started to take negative stance on Indian Telecom Story and initiated process. Latest in the round is Augere Ltd, a wholly owned subsidiary of Augere Holding BV based out of Netherland.

Augere Ltd won in BWA auction in 2010 to offer wireless internet service in two states – Madhya Pradesh and Chhattisgarh in 2010 post paying 125 Cr (INR) decided to exit Indian Telecom sector and Ericsson scarped 4G equipment deal. Last 2 years, the unwarranted happenings around license allocation, license cancellations, notice after notice by regulators to licensees for one or another aspect, new amendment in security, roaming, MVAS, MNP, Spectrum auction and many other dented investor confidence. The GoM is mulling possibilities to refund Indian Telecom PSU BSNL BWA Spectrum fee. It clearly indicates that during auction the base pricing was high with low opportunities. The recent inclusion of voice support over 4G network turned the strategy table of won bidder upside down given Reliance Jio countrywide presence. In my point of view, in case GoM agrees to refund to BSNL then Private Player with one or two circle presence is going to surrender their spectrum too. The reason from all stake holders would be one line “Regulatory Uncertainty and Constant change in Clauses”. Analyst might see it more from the consolidation perspective but I feel that one should also see it from Investor confidence perspective. What message government is sending across? Government should also consider early warning message from private 3G service player regarding their threat to government regarding spectrum surrender.

India Mulling FDI Limit Removal in Telecom Sector – Should Government focus Policy Clarity &Implementation OR FDI ?

In view of shoring off confidence in Indian Telecom sector, GoM are mulling removing FDI cap to bring in value investment from outside. Barring Bharti Airtel Stake sell, the Indian Telecom Sector little FDI investment in the last 2 year. The 2G scam, 3G auction saga, one time license fee, 3G roaming, security clearance, spectrum re-farming are some of the on-going contention which got lots of media glare and created negative sentiment about India Telecom Story. The cancellation of 2G license and loss of $ Bn’s , International Telecom giants burnt their investment. If we really want to attract FDI in Telecom; the policy clarity and implementation of above mentioned few contentions would send positive signals to potential investors

Biggest and Growing Hurdle of Indian Telecom Sector Growth

In recent years, Indian telecom sector started experiencing cascaded impact on multiple fronts. Once, FDI investment darling experienced lowest FDI investment inflows in the last 2 years period. The constant amendment of regulation and non- correlated action initiated by both Telecom, Finance and Defence ministry helped growing doubt about government intention to offer single window clearance to International and domestic investor to invest across sectors. For post readers, the first opinion about me that I am critic of government but that’s not the fact. The issues related to ILD, roaming, MNP, MVAS, taxation of Vodafone, Idea,2G scam, 3G roaming agreement, voice service enablement for BWA license holders post auctioning license are few examples of lack of vision and wrong assessment of ground reality. Simple query pops up about recent additional tax demand from Vodafone, Bharti, Rcom and other Telco after 3 financial years. I don’t think that our finance ministry so incapable of not identifying the discrepancies on the fly. Recent penalty on Bharti for services which got discontinued 5 years back demonstrate that service provider must be open to get notice on any aspect any time from associated ministries. The operators collaborated on 3G roaming and I strongly believe that all the service providers are not stupid and incapable of identifying the positive and negative implications. The DoT notice and subsequently court orders for Bharti to pay 350 Cr as penalty only justifies that the communications in the form of consultation or any other form are grossly under rated. The immediate reaction of Telco industry was even more negative for investor as well government by demanding re-auction of 3G license based on the current and future policies projection or refund paid amount back to service provider. In a scenario when government is offloading their stake of Navratana PSU’s to control Fiscal deficit in order to delay another credit downgrade from rating firm. It is unfortunate to read news article that any scam investigation take the everything decade back and that got validated by Summoning the architect of Indian Telecom sector Mr. Sunil Bharti Mittal and Mr. Ruia. Being citizen of great India, my query to government is simple – Why investigating agencies woke up after 10 years. On the contrary, the parliamentary investigation panel, JPC chairman is willing to take the final decision without calling the prime suspect of 2G scam. Do we believe that India growing campaign will carry relevance when the reality is different? Recently, respected Finance Minister travelled to different geographies to attract FDI and also claimed seamless regulatory / Policy implementation. Today we are at 4.8% GDP growth and government is projecting 6.5% in coming few quarters. I am rest assured based on my analysis that it would even go down in current scenario. In my point of view, government inter departmental minister must discuss in GoM about their weakness rather than putting the onus on Industry.

Mr. Sunil Bharti Mittal, Mr, Ruia and many other industrialists are brand of India and International investor invests on the basis of their commitment not on the basis of Manrega or Food security. Still it’s not late; all of us must try on individual or collective level to increase India Brand which got dented badly due to policy paralysis in the recent past.