Why Jyotiraditya Scindia feels telecom hikes are justified. (And what’s on cards for BSNL revival, MTNL debt)

Telecom minister Jyotiraditya Scindia has backed the recent tariff hikes by private sector players, stating carriers which have invested more than ₹4.26 trillion over the last two financial years and rolled out 5G networks in record speed require some return on capital.

“In 21 months, 5G has been rolled out, 450,000 base stations have been set up. Telcos have spent close to ₹4.26 trillion in the last two fiscals. There has to be a return on that," Scindia said in an interview, adding this is the first tariff hike in the telecom sector in three years. Voice tariff that stood at 0.53 paise per minute in 2014 came down to 0.03 paise, before inching up to 0.033 paise now, he said.

Reliance Jio, Bharti Airtel and Vodafone Idea raised tariffs in June this year, their third since 2019, which took up the average tariff for consumers by 10-21%. Telcos also began charging for entry-level 5G plans.

Scindia said that despite the hike, India’s data and voice tariffs were among the lowest in the world, with data plans in developed markets like the US as high as $40 a month.

New PLI scheme for telecom design in India

The government will also look at introducing a revamped production-linked incentive (PLI) scheme for the telecom sector with higher incentives for designing equipment in India across the value chain. The present scheme only offers incentives for the finished product.

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“We're trying to make sure that the whole value chain gets captured here and the value addition, even in R&D, gets captured in India. There has to be an incentive for you to do it here, which is why we're looking at that,” he said.

He noted that the existing telecom PLI had given about ₹4,000 crore worth of investments, around ₹50,000 crore worth of production and ₹10,000 crore worth of exports from the country.

Revival of BSNL, sovereign backing of MTNL debt

Scindia said that BSNL’s 4G services should be up and running across the country by mid next year by which time the consortium of vendors – TCS, Tejas and C-DoT – would have set up all 100,000 towers. The public sector telco had already set up 24,000 towers in some regions of the country. He noted that the same towers would be used for 5G rollout once the full 4G rollout is complete.

He added that MTNL’s operations were being taken over by BSNL, but did not comment on whether BSNL would undergo a public listing, replacing MTNL which is a listed entity.

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“My primary objective right now is to make sure that we have our 4G rollout and we do our saturation post that, once I'm able to ensure quality of service for customers and make sure that BSNL is able to give sustainable results. At that point of time, we will look at may be capital expansion,” he said.

Scindia added that any of MTNL’s debt will be guaranteed by the Indian government. The government is also the single largest shareholder in Vodafone Idea, the third largest telecom service provider in the country, after the carrier converted interest on spectrum payments it owes to the government into equity as part of the reforms package back in 2021. The ministry has maintained that it does not want to get involved in the carrier’s daily operations. “We've got a good number of players in the telecom field as well,” Scindia said.

Reducing litigation

Scindia said that the ministry will look to reducing unwarranted litigation in the telecom sector in the future as a reform measure, but any pending issues will have to be resolved in consultations with the ministry of finance as well as the ministry of law and justice.

“The Prime Minister is very clear that government has to reduce litigation. Whatever is pending, there are overlaps of jurisdiction, and I'm using that word very freely here, between Department of expenditure, Department of telecom and department and of law and justice. But needless to say, that's something that we are looking at doing with efficacy as soon as possible,” he said.

Among several cases that are pending, the apex Court is set to hear Vodafone Idea's curative petition on the issue of seeking relief on clerical errors in the government’s demand for adjusted gross revenue or AGR, on Friday. The case dates back to 2019 on payments owed to the government.

Priority areas in the long run

In three months since taking over the communications ministry, Scindia has set up six stakeholder committees related to telecom service providers, satcom service providers, internet service providers, equipment makers, telecom manufacturing and academia, to dig into issues of the sector and bring out solutions. 

“As a minister in 2024, my role should be, and my ministry's role should be, less that of a regulator and more of a facilitator, because telecom is so crucial to any country's economic growth, in many ways, in the sector's growth lies India's economic success as well,” he said.

Scindia has identified six key areas including execution of the Telecommunications Act 2023 by December or early January, 4G rollout of Bharat Sanchar Nigam Limited, connecting the unconnected areas of the country, the ₹1.39 trillion capex third phase of connecting all 260,000 gram panchayats with fiber under Bharat Net, that which will be top priorities for the ministry. Improving quality of service for consumers, reducing spam and fraud will be another key priority area for the ministry, where the Telecom Regulatory Authority of India was doing active work, Scindia said.

Satellite communications

The minister added that the Telecom Regulatory Authority of India (Trai) will soon issue a consultation paper on usage of spectrum for satellite broadband, but declined to comment on whether the government will consider requests by foreign satellite players like Elon Musk’s Starlink and Amazon’s Kuiper, to permit Indian gateways for other countries.

“There is whole issue of GEO versus MEO versus LEO, which has got to do with spectrum, because GEO today has administered spectrum that's given. So let Trai have a look at it,” he noted. 

GEO refers to geostationary satellites, MEO to Mid Earth Orbit satellites and LEO refers to Lower Earth Orbit satellites. Each uses different kinds of spectrum.

OTT regulation

The minister added that the issue of regulation of over-the-top or OTT players was yet to come up in the discussions with stakeholder advisory groups.

“Let the industry talk to me about it. We're taking each issue and drilling down till the end and making sure one way or the other is either getting resolved and who the responsibility lies with or this is not something that can get resolved,” he added.

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The industry has been vocal about including OTT platforms like WhatsApp, Signal, Telegram, Instagram and others within the ambit of communication services and treating them at par with telcos in terms of levying license fees and other charges as they were also providing communication services. The telcos have relied on the new telecom law arguing that definition of communication includes OTT platforms.

More sectoral reforms

The telecom sector saw the last wave of reforms in 2021 and a new set of regulations this year with the Telecommunications Act 2023 that replaced three old laws. 

Scindia said that while the new law had simplified and clarified regulation, the government could look at reforms in penetration of coverage, improved bandwidth and quality of service, which will be complementary to its key priority areas.