NEW DELHI: Bharti Airtel and Idea Cellular have challenged the telecom regulator’s recent tariff order on predatory pricing in the telecom tribunal, setting the stage for another legal battle between India’s older carriers and the sectoral watchdog who have been at loggerheads for more than a year now.
India’s first and third ranked telcos have argued that the February 16 order was unconstitutional as it prevented them from retaining customers and conducting business, people familiar with the matter told ET.
They added that the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) will hear the pleas this week with Bharti Airtel’s plea likely to be heard on Monday.
An Idea Cellular spokesperson confirmed the legal step, but did not share details, while Bharti Airtel did not comment to an ET query seeking confirmation.
The battle lines are now drawn starkly, with the Telecom Regulatory Authority of India (Trai) on one side and incumbent telcos on the other. India’s top three operators – Bharti Airtel, Vodafone India and Idea Cellular – contended the rules favoured new entrant Reliance Jio at their expense, allegations that Trai and Jio termed baseless. The regulator has, in fact, said the companies were free to move court to challenge the order.
On February 16, Trai issued a tariff order that mandated a new formula last month to identify predatory pricing and changed the definition of significant market player (SMP), giving pricing flexibility only to operators with less than 30% of the market’s subscribers or revenue. Earlier, the SMP parameters included volume of traffic, including data, and switching capacity, which have been dropped in the amended regulation.
Trai added that predatory pricing will be determined on a carrier’s average variable cost and that telcos cannot offer pricing packages to individual subscribers to retain them without offering all customers the same tariff plan. Due to change in definition of predatory pricing and in SMP, incumbents said they were straitjacketed to respond to below cost tariffs from competition without flouting the new rules.
Jio has 13-14% share of revenue and users, while Airtel and the Vodafone-Idea Cellular combine would each have over 30% revenue market share. Therefore, the new rules on predatory pricing favoured Reliance Jio Infocomm, Vodafone Group CEO Vittorio Colao said last week, adding that the order should be challenged in court. Vodafone’s India arm is close to completing its merger with Idea Cellular.
It’s not yet clear if Vodafone has filed a legal challenge as well. The company didn’t respond to an emailed query seeking comment.
Bharti Airtel chairman Sunil Mittal said the regulator’s order did not leave any path save legal challenge for incumbents, as the order violated the right for entities like itself to do business which was enshrined in the Constitution, under Article 14.
“If you are my customer and I need to hold you back, then I must have the right to do so with whatever tools I have,” Mittal said.
However, Trai chairman RS Sharma said the companies would be within their rights to take a legal recourse to challenge its regulation in court, and called it the “appropriate forum” to do so.
“India is a free country and every individual, entity or company has the right to go to court and we have no issues, reservations or objections if the Cellular Operators Association of India (COAI) challenges our regulation in court since that is the appropriate forum to do so, and we welcome it.”
COAI had also warned of moving court against the order, saying that the order favoured the new entrant, and sought urgent government intervention.