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TRAI gives Reliance Jio clean chit on free data offers, rivals won’t sit quiet

Airtel and Idea moved telecom tribunal to stop Reliance Jio from offering free data, as it impacted the industry’s financial health. However, TRAI decided to rule in favour of Reliance Jio.

business Updated: Feb 03, 2017 15:32 IST
Sunny Sen
Sunny Sen
Hindustan Times
TRAI,Reliance Jio,Airtel
Mumbai: Reliance Industries Limited Chairman Mukesh Ambani speaks during a press briefing of Reliance Jio(PTI)

The telecom regulatory authority of India (TRAI) has allowed Mukesh Ambani-led Reliance Jio to continue with its “Happy New Year” offer, which allows its subscribers to use up to 1GB free data every day.

To put things in context, with 1GB of data you can send 1.5 million Whatsapp messages or watch Youtube for a tad more than five hours.

On December 24, Airtel filed a petition with telecom tribunal, TDSAT, calling TRAI a “mute spectator” as it allowed Reliance Jio to continue with its free offer beyond the stipulated 90 days period. Idea Cellular, an Aditya Birla Group company, too, moved TDSAT on January 18, to stop Reliance Jio from giving free data.

On December 20, TRAI asked Jio why its promotional offer shouldn’t be treated as “predatory”. Jio replied that its offer was different from its “Welcome Offer”, started on September 5, with the company rolled out its services in the market.

TRAI said is a letter to operators that, “on examination” they have found out that the Happy New Year offer launched by Reliance Jio “is distinct from their earlier Welcome offer and cannot be treated as an extension of the earlier promotional offer as the benefits under both sets of promotional offers differ”.

On that ground Reliance Jio has been allowed to continue to offer its free services. According to that argument, Reliance Jio can tweak its offer by the end of March and continue to use it after Happy New Year offer comes to an end.

“If there is anything free in the market, the whole industry gets impacted,” said Sunil Bharti Mittal, chairman and managing director of Bharti Enterprises, owners of Airtel, during its launch of Airtel Payments Bank in Delhi. The largest telecom operator of the country reported 55% drop in net profits in its October to December quarter.

Meanwhile, sources told HT that Jio had written to the Attorney General of India, “perhaps seeking legal advice” in the matter.

“Who is questioning the legality… What we are questioning is the commercial viability of the industry. More damage has been done in this bargain, and we will not sit on it,” said a spokesperson of a telecom company.

The person also said, “this was expected”, in despair.

The price war has already started building fear amongst employees in the telecom companies. An employee with one of the top three telecom operators said that “if these continue, there will be job losses”.

Reliance Jio’s entry into the telecom industry has already thrown operators into a tizzy. Vodafone has announced a merger with Idea Cellular to cushion itself against Reliance Jio’s fire power. Airtel is rumoured to be in talks to acquire Norwegian telecom operator Telenor’s local business.

The industry is already burdened with heavy debt of Rs 3,85,000 crore, and the doling out of free services reduces the operators’ ability to pay back loans.

TRAI, however, is not ready to make any compromises on this ground. “Happy New Year is not a violation of the regulatory guidelines on promotional offers,” it said.

First Published: Feb 03, 2017 13:06 IST