Monday, April 27, 2015

Heavy-handed regulation, slow-moving reforms characterize Modi's one year in office: Vodafone chief

By Our Representative
Prominent British daily "Financial Times" (February 26) has criticized Prime Minsister Narendra Modi for "heavy-handed regulation and slow-moving political reforms" as the main hurdles for India’s "battered" telecom sector's efforts to move towards developing next-generation broadband services. The daily quotes the outgoing chief executive of Vodafone, India's second biggest telecom operator, to warn that India may risk missing "a huge opportunity”.
Marten Pieters, who leaves his post at the UK-based telecom group this month, says the daily, just another "most prominent foreign executive" who has chosen to finally break silence and chosen to complain about "limited progress in improving India’s business environment under Modi". The remarks come even as Modi is about to complete one year in office.
One of India's largest foreign investors, which has spent more than $12 billion in developing its business since it launched its India operations in 2007, the daily says, the Vodafone group has "endured a number of problems from a highly publicized $2.6 billion tax dispute to frequent battles over inadequate and excessively expensive supplies of telecom spectrum."
Pointing out that most recently Vodafone "spent a further $4 billion in India’s most recent auctions last month", Pieters is quoted as saying, "India’s issuance of spectrum in bits and pieces has driven up prices and let telecoms groups with roughly $55 billion in net debts." He regrets, “The government has been very focused over the last few years to tap this industry as a milk cow.”
Pieters believes that the telecoms sector is in a “fundamentally worse” condition than when he took up his role as chief executive officer in 2009, adding, the company's debts now mean "operators are unable to roll out services to rural areas or to invest in new broadband infrastructure, hurting telecoms operators as well as companies in fast-growing sectors such as e-commerce."
“We have a huge broadband penetration problem in this country,” Pieters says, adding, “We are worse than Kenya, we are worse than lots of other countries which are supposed to be much less developed than India. There is such a huge opportunity to build services that would help development. But by driving the prices up you create a debt overloaded industry.”
According to Pieters, conditions on the ground haven't yet improved in India, with telecom companies facing excessive taxes and charges, which meant Vodafone had to pay "nearly 30 per cent of gross revenues to the government." He adds, "In general there is too much bureaucracy for the wrong reasons. Tax collection has been extremely aggressive, and we have not seen much change there yet."
The daily says, the Vodafone executive's comment comes even as it begins rolling out superfast 4G telecoms services later this year, even as its focus continuing to be on expanding take-up of more basic data services, where massive opportunities remain for growth.

No comments: