High spectrum price can hit investments: Vodafone

Barcelona: UK's Vodafone has flagged its concerns about high spectrum pricing, saying it can play a spoilsport for investment into India ahead of its biggest-ever telecom auction.

"The pricing of spectrum should reflect the internal capital of the Indian market and the fact the tariffs are very low in India. If you set prices which are too high for spectrum, money is not going to go into investments. There must be a proportion between cost for spectrum and the economic condition of the country," Vodafone Group CEO Vittorio Colao said here yesterday.

His comments came weeks after regulator Trai proposed a base price for sale of spectrum in seven bands, which could fetch up to Rs 5.36 lakh crore.

The spectrum sale, which is estimated to fetch more than double the total annual revenue of all telecom companies, that is Rs 2.54 lakh crore, is likely to be held in May/June.

Colao said there should always be returns on investment.

"The return on capital is very important. We make a lot of money, but we also invest a lot of money and the gap between the two is sometimes not as much as people think. There is also a second thought sometimes that prices will go up if there is consolidation overtime.

"But if you look at the price (per minute), they are going down and down. So, when people are wondering around the prices in our sector, I think it's not fair," Colao added.

The regulator had recommended a record base price of Rs 11,485 crore per Mhz for 700 Mhz. If all available frequencies get sold at Trai-suggested price, then it can alone contribute over Rs 4 lakh crore.

Asked about Reliance Jio launching services which will intensify competition, Colao said, "As far as Jio is concerned, I know it is going to be formidable competitor... We will be as ready as we can to welcome them. But we have competitors everywhere in the world and now it (Jio) is going to be another powerful one. But it (Jio) is just another powerful one."

He said they have launched 4G in India in a couple of cities and are progressively launching everywhere. "Having said that, it is also a 3G market for many years and we continue to be there. So, we will keep both technologies in parallel -- I want to stick on both 3G and 4G," he said.

On the tax notice by the Indian government, Colao said the arbitration case is going on.

"We have said what we had to say about that notice and we have pretty good relations with the government. Arbitration keeps going with no disturbance, I would say," he added.