Companies & Sectors
SC asks TRAI if it is inclined to review call drop penalty
New Delhi : The Supreme Court on Thursday asked the telecom regulator TRAI whether it would relook its decision imposing penalty on the telecom service providers for call drops in the wake of its own technical paper endorsing the position taken by them.
 
Asking the Telecom Regulatory Authority of India whether it still maintained position on penalty for the call drops or would consider re-examining it in the light of its own technical paper of November 2015, a bench of Justice Kurian Joseph and Justice Rohinton Fali Nariman told it to file an affidavit stating its position before next date of hearing (March 30).
 
"Factually, it appears that nobody had seen technical papers on the day of the framing of the regulation (imposing penalty for call drops). Please take into account the technical paper and tell us whether you consider amending the regulations or you still want to stand by it. Whatever you have to say, tell us with reasons," it said.
 
The court's observation came as senior counsel Kapil Sibal appearing for the Cellular Operators Association of India (COAI) took the court through the technical paper pointing out that it endorses the position being taken by the service providers before the court.
 
Pointing to the phenomenal growth of the telecom sector with every day calls made accounting for one billion minutes and revenue generation of Rs.70,000 crore, he said that for the growth of the sector, the relationship between the government and the telecom sector should be transparent and the attitude of penalising must go.
 
As Sibal said that there was time when for one call from mobile phone, he used to pay Rs.32, Justice Nariman recalled that in old days, even a lightning call used to materialise in at least two hours with urgent call having a little chance of getting through.
 
Assailing the oft-repeated government position that after giving the licences and spelling out the terms and conditions, the rest was the industry's burden, he said that technical paper clearly states the problem facing the sector including paucity of spectrum, interferences, shortage of towers, electromagnetic frequency, Right to way (RoW), multiple agencies including civic bodies for getting clearance for putting up the towers and so on. 
 
Sibal wondered if by imposing penalty on service providers for their call drops, the problems being faced by them at the hands of different agencies could be solved. Referring to the South Delhi Municipal Corporation's decision to seal and demolish 2,000 illegal towers, he asked if it would not result in call drops.
 
Referring to aviation sector where a flight is delayed or aborted on account of dense fog or a snag, he asked would the regulator ask the airlines to compensate the passengers. "Similarly in power sector, there are breakdowns... are we going to ask them to compensate the consumers," he asked.
 
"In telecom sector imponderables are far greater," said Sibal, stressing that nowhere in the world do such penalties exist.
 
When Justice Kurian said that in Japan for a delayed or aborted flight, passengers are compensated, Sibal said: "When you have a surplus of $30 trillion you can do it. But we are a growing economy. Emerging economy. There are problems we are grappling with."
 
The COAI and the Association of Unified Service Provider of India (USPAI) have challenged the TRAI October 16, 2015 notification obligating the service provider to compensate the consumer for the three dropped calls paying Re.1 for each of the call a day.
 
The penalty was to come in force from January 1, 2016.
 
The Delhi High Court on February 29 upheld the order of the TRAI making it mandatory for cellular operators to compensate subscribers for call drops. The industry associations had then moved the apex court.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Limited participation likely for telecom spectrum auctions: ICRA
New Delhi : Forthcoming spectrum auctions are likely to attract limited participation from telecom companies, and lead to the rise of industry debt to Rs.4,60,000 crore, credit rating agency ICRA said on Thursday.
 
"Given the estimated level of participation in the auctions, the industry debt would rise to around Rs.4,60,000 crore, further stressing the capital structure of the industry and deteriorating the debt protection metrics," said ICRA's senior vice president, Corporate Sector Ratings, Sabyasachi Majumdar in a statement.
 
Expecting a sale of spectrum worth Rs.60,000 to Rs.80,000 crore, he said the industry's consolidated debt level rose from Rs.2,90,000 crore in March 2014 to around Rs.3,80,000 crore by December 2015.
 
"This rise in debt is expected to worsen the gross debt/OPBDITA levels of the industry to around 6.5 times as against the current levels of 5.4 times," added Majumdar.
 
According to ICRA, the industry is expected to face cashflow pressures and thereby require additional funding to sustain network rollout momentum.
 
ICRA highlighted that some telecom companies have taken inorganic de-leveraging steps by selling stake in certain assets, which, if successful, can bring Rs.30,000 crore to the industry.
 
Interestingly, the industry is facing stress on capital structure at a time when operating metrics are also facing pressure.
 
Gross Average Revenue Per User (ARPU) declined from Rs.183 in Q3 2015 to Rs.173 in Q3 2016.
 
Though data ARPU rose from Rs.145 to Rs.162 during the period under review, voice ARPU fell from Rs.140 to Rs.127, said ICRA.
 
"But this data ARPU is driven by increase in usage, while the realisations remain under pressure. Going forward, growth in subscriber base and usage is expected to slow down, even though the realisations are not expected to grow materially," it said.
 
Further, the entry of Reliance Jio Infocomm is expected to drive the competition madder and aggravate the already declining voice and data revenue realisations for telecom companies.
 
However, the recently proposed merger/spectrum trading deals which can lead to consolidation in the sector is a ray of hope, it said.
 
Smaller telecom companies looking to sell their unutilised spectrum holdings to larger players interested in improving spectrum holding outside auctions can bring in network efficiencies, it added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Competition between banks, NBFCs in retail credit to rise: ICRA
Kolkata : Competitive pressures on retail-focussed NBFCs are to intensify while banks are increasing focus on retail segments due the pressures on corporate credit, according to a report released on Thursday by credit rating agency ICRA.
 
"Banks which account for 56 percent of industry retail credit are also increasing their focus on retail segments due the pressures on corporate credit. Competitive pressures on retail-focussed NBFCs are to intensify," it said, adding public sector banks which are in pressure by weak asset quality and earnings and large capital requirements could increase lending to the less capital intensive retail segment. 
 
"Retail credit from non-banking finance companies (NBFCs) is expected to grow by 19-22 percent in the 2016-17 fiscal starting from April this year," it said.
 
According to the agency, retail credit growth is likely to be picked up by improvement in commercial vehicle segments, better growth for gold loans and microfinance sector along with unsecured loans and loans against property.
 
Retail credit from NBFCs stood at Rs.4.7 trillion at the end of calendar year 2015 with a year-on-year growth of nearly 19 percent. 
 
The agency estimates NBFCs will need to mobilize Rs.2.2-2.4 trillion funding in 2016-17, out of which bond mobilisation could be to the extent of Rs.600-700 billion.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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