Jio accuses competitors of forming unethical cartel

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Kunwar Prithvi Singh Chauhan
Part time journalist, full-time observer. Editor-in-Chief at The Indian Wire. I cover updates related to business and startups.

Reliance Jio, Mukesh Ambani led latest entrant to the telecom market, has accused the incumbent operators of forming unethical cartel against it. In its statement, Jio also added that the companies need to take care of their financial stress on their own, rather than seeking help from the government. According to Jio, the problem of financial stress has risen because of the unethical practices by the incumbent operators and not because of Jio’s entry into the foray.

The statement was given to a committee of 8 members appointed to submit their report on the debt-ridden telecom sector of the country. Jio also stated that the companies should disinvest in their stakes and should raise at least ₹125,000 crores to invest in newer technologies.

According to a Jio executive, the cartelisation formed by the big 3, Bharti Airtel, Vodafone India and Idea Cellular has made the smaller players suffer in retaining the customers. The three telecom operators have had similar prices of their plans, which proves the combined strategies to dominate the market with higher priced plans. This has also been proved by CCI and TRAI.

The executive from Jio also suggested the committee to recommend lowering down the GST on telecom sector to 12% from the existing 18% and to subsume the licence fee within the GST. It has also recommended to lower down the percent of spectrum usage charges to flat 1% so that the decrease in average revenue does not harm the telecom companies in the coming months.

The telecom sector of the country is currently under a debt of ₹4.9 lakh crores. The entry of Reliance Jio with super cheap offers has made the other telcos struggle for revenue and profits. At the end of March 2017, Airtel was under a debt of ₹92,000 crores, Vodafone at ₹63,000 crores and Idea Cellular had a debt of ₹50,072 crores.

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