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Spectrum price: Telcos plead their case with Govt against TRAI

Last Updated: Wednesday, May 2, 2012 - 23:44

New Delhi: Rankled by TRAI's recommendations on 2G spectrum auction, leading telecom firms Wednesday made a pitch to top government functionaries, including Home Minister P Chidambaram and Finance Minister Pranab Mukherjee, urging them not to accept the regulator's "catastrophic" recipe.

"We presented our case to leadership and senior ministers in the government... This industry is vital for the nation and the recommendations of TRAI could spell a death knell for the industry," Bharti Airtel Chairman Sunil Mittal told reporters here.

He said that Telecom Regulatory Authority of India's (TRAI) recommendations will be "catastrophic" for the entire telecom sector.

Mittal was joined by Vodafone Chief Executive Vittorio Colao, Idea Cellular Chairman Kumar Mangalam Birla and Telenor CEO Jon Fredrik Baksaas. They first presented their case with Chidambaram and Mukhejree and then followed it up with Planning Commission Deputy Chairman Montek Singh Ahluwalia and Telecom Minister Kapil Sibal.

They also met Pulok Chatterji, Principal Secretary in the Prime Minister's Office, besides a host of top bureaucrats, including Telecom Secretary R Chandrashekhar and Commerce Secretary Rahul Khullar.

"If the decisions are taken in interest of the industry, they (TRAI recommendations) have to be changed. I think the current recommendations will kill the industry," Birla said.

Baksaas said the auction policy should be catalyst for "affordability, competition and investments" rather than leading to tariff hikes as would be case with TRAI setting a very high base price for the auction.

"The recommendations are such that looking forward, they do not make a viable business case for Telenor," said Basksaas, whose company has indicated that it may exit India business.

Telenor in a filing to the Oslo Stock Exchange earlier this week said it will write down USD 682 million, thereby bringing its accounting exposure in India to nil.

TRAI has suggested a base price of Rs 3,622 crore for one megahertz (MHz) for pan-India spectrum. This is around 10 times higher than the price at which 2G licenses bundled with 4.4 MHz spectrum were allocated in 2008 under the then Telecom Minister A Raja.

According to Trai, a minimum of 5 Mhz spectrum should be allotted, which means that pan-India airwaves in 1800 MHz band will cost Rs 18,000 crore.

"This has been the most destructive period of regulatory environment I have seen in 16 years," Mittal said.

The objective of the meeting was to bring to the government's attention the "disastrous" impact of the recommendations will have on the ability of operators to continue their operations.

Baksaas said issue of spectrum refarming brings scope more players on board to voice against Trai's proposal.

"When also 900 (Mhz) refarming was brought in to the question that obviously caught the eyes of whole industry that is why industry players can join in common message... The overall picture of Trai's recommendations stands out as very very expensive package for everyone," Baksaas said.

As part of spectrum auction recommendations, Trai has proposed roadmap for spectrum refarming under which existing player will be made to use high frequency of 1800 Mhz band compared to the low frequency band of 900 Mhz.

Telecom signals emitted using 900 Mhz frequency band cover large area compared to 1800 Mhz band. These proposals, if approved, will hit business of incumbent operators, including Bharti Airtel, Vodafone and Idea Cellular.

Asked if Idea will participate in the forthcoming 2G auction, Birla said "I don't think it makes sense to participate in the auction for anyone at these prices."

On tariff hike, Mittal said the country's leadership wants affordable tariff. "Recommendations (of TRAI) fly on the face of that aspiration of the government to give affordable tariff."

Birla said "Subscriber will definitely pay much higher tariff if this is the kind of reserve price (accepted by the government)."

Asked about government's response, Birla said, "I think government has said that they are examining the issue thoroughly before giving go ahead to any decision."

The telecom chiefs last meeting for the day was scheduled with Sibal where the telecom minister assured them of all possible support from government after following due process.

"Telecom operators met me and we had full discussion. They expressed concern regarding Trai recommendations and I said we will certainly look into the matter," Sibal said.

The Department of Telecommunications has today sent back recommendations of Trai to seek clarifications on various issue and also asked to examine issue raised by telecom companies.

After receiving final recommendations, DoT will take it to Telecom Commission and then to Empowered Group of Minister, headed by Mukherjee, who will take final call on the spectrum related issue.

DoT on the other side has started process for selecting auctioneer- agency that will operate auction process.

Supreme Court has asked government to complete auction by August 31.


First Published: Wednesday, May 2, 2012 - 23:44
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