“The rule is unfair”; Vodafone CEO raises voice against new pricing

New rules and regulations come into existence to create a balance and avail equal opportunity to all. But what if the law favors some?

British telecom major Vodafone on Monday termed Indian telecom regulator Telecom Regulatory Authority of India (Trai)’s new rule on predatory pricing as “unfair” and said the company has to fight the competition “with hands tied at the back”.

Vodafone Group CEO Vittorio Colao said that the company has lost 80% business in India due to data tariff war fuelled by a new competitor in the market.

He said that the rule was favoring Reliance Jio Infocomm, and said it should be legally challenged, raising the pitch of an ongoing battle between India’s older operators on one side and the regulator and the new telco on the other. 

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Speaking to reporters on the sidelines of the Mobile World Congress Monday, Colao said that the regulatory environment in India continued to be “too complicated” and decision-making still slow but added that the UK telecom major will continue to compete aggressively in the South Asian market through the merger of its India unit with Idea Cellular which was on track. 

Colao though lauded finance minister Arun Jaitley’s recent comments at the Economic Times Global Business Summit, that the decision to tax Vodafone Group retrospectively, taken by the UPA 2 government, was ‘erroneous’ and that the present government will not be going down that path. 

But the latest tariff order by the Trai on predatory pricing rankled Colao. 

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“We believe Trai’s predatory pricing regulation favors Jio and it should be legally challenged,” Vodafone’s top executive said. “We want fair competition. We are not in agreement with that Trai regulation.” 

A tariff will be considered predatory if in a “relevant market”, a telecom operator with over 30% market share offers services at a price which is below the average “variable cost”, with a view to reduce competition or eliminate the competitors in the “relevant market”, as per an amendment made by Trai in the Telecommunication Tariff order.