Axiata says committed to long haul in India telecom story
Axiata added that the high spectrum reserve price will adversely impact their business case, along with the viability of the industry and pricing for the end consumer.
New Delhi: Amid concerns over the revised TRAI recommendations on spectrum auction, Malaysian telecom firm Axiata, which holds around 20 percent stake in Idea Cellular, Tuesday said it remains committed to a long haul in the country.
It, however, added that the high spectrum reserve price will adversely impact their business case, along with the viability of the industry and pricing for the end consumer.
"We are here for the long term, so we are not exiting... (but) the extent of how much we invest will be determined vis-a-vis the additional cost of spectrum... It will have to be carefully considered," Axiata President and Group CEO Jamaludin Ibrahim told reporters here.
Officials from Idea Cellular and CEO of Axiata Tuesday met Telecom Minister Kapil Sibal, Department of Telecom (DoT) Secretary R Chandrashekhar and TRAI Chairman Rahul Khullar to highlight their concerns on high reserve price, refarming and the "artificial scarcity of spectrum" being created.
Other global investors like Norway's Telenor have expressed concerns about the high reserve price and have said it would be difficult for them to participate in the upcoming auction.
Telecom Regulatory Authority of India (TRAI) has proposed a reserve price of Rs 3,622.18 crore for every mega Hertz of spectrum in the 1800 MHz band, where radio airwaves have been freed after the Supreme Court cancelled all mobile permits issued by the then Telecom Minister A Raja in 2008.
"We have no objections to the principles behind what the government is trying to do... As a major investor in Idea, we think that our business case, viability of the industry and at the end, the consumer will be effected," Ibrahim said.
He added that it would be difficult for the industry to bid at the suggested rates and continue offering the services at current prices.
"Either we accept the fate and may be some of us will die a natural death or increase the price for the customer, one of the two things will have to happen," he said.
On refarming, Idea Celluar said it doesn't happen too often where the spectrum is just taken away from you. Shifting to other bands will incur huge capex and opex on the company.
"A back of the envelope calculation-based on the kind of electronics that would have to be removed and including BSNL and MTNL the reckoning was somewhere around Rs 25,000 crore would have to be written off," Idea Cellular Chief Corporate Affairs Officer Rajat Mukarji said.
Additionally, there could be a Rs 1.25 lakh crore of capex which would have to be incurred to compensate on a business as usual situation, he added. On refarming of 900 MHz of spectrum, Telecom Regulatory Authority of India (TRAI) has maintained its stand.
This is a major concern for incumbent GSM players like Bharti Airtel, Vodafone and Idea Cellular as they will have to shift to 1800 Mhz band from the current 900 Mhz band. This would increase their cost of infrastructure as they would have to make fresh investments in equipments.
Vodafone and Idea Cellular had indicated that refarming will cost them Rs 10,000 crore and Rs 17,000 crore, respectively.
Ibrahim said Axiata has so far invested USD 2 billion in India but now due to the changed scenario, the company will have to re-consider additional investments in the country.
"We will stay put but it will impact our next investment decision about how much we will invest," he said.
He said though India still remains a market of potential and the company is a long term investor, the time frame for return on investment from the country has increased.
"When we invest in countries, we look at five to ten years for return on investments... (But) if TRAI recommendations are accepted than it will be beyond ten years," he added.