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NEW DELHI: Top telecom companies warned that implementation of the sector regulator's recommendations on spectrum auction could lead to a 100% jump in call rates in India, where tariffs are the lowest in the world.
At a joint media briefing, the chief executives of Bharti Airtel, Vodafone, Idea Cellular, Telenor-owned Uninor and Videocon said the proposals made by the Telecom Regulatory Authority of India (Trai) could prove to be the "death-knell" for an industry considered the poster-child of the Indian economy.
Sanjay Kapoor, chief executive office of the country's largest telecom operator, Bharti Airtel, and chairman of lobby group COAI, said that Trai's latest suggestions would "make the business case even more awful" for telcos that are pressured by high debt and thinning margins.
"The implications of this change could be anywhere as high as 100% of the existing rates, which would have to be compensated by customers," Kapoor said, adding, "This would vary from circle to circle... We know this could play havoc in a price-sensitive market like ours."
Terming Trai's calculation that tariffs would go up by only 2 paise a minute annually as "away from reality", he said mobile telephony prices could jump even higher if re-farming was taken into account.
Trai had said that the spectrum available with incumbents in the 900-MHz band should be replaced by spectrum in the 1,800-MHz band, which should be charged at the price prevalent at the time of re-farming.
On April 23, Trai proposed a reserve price of Rs 3,622 crore per unit of spectrum at the pan-India level for auction, which is 13 times higher than the price paid for getting 2G licences in 2008. The regulator proposed to auction only 5 Mhz of spectrum in the first lot, which meant that only one player will be able to secure new mobile permits.
Telcos would have to cough up more than Rs 18,000 crore to get 5 MHz of spectrum just to begin operations. This would collectively cost the industry tens of thousands of crores, said Idea Cellular's managing director Himanshu Kapania. "It's a make or break amount for us... I don't know how many will have the might to come back and bid," he said.
Kapoor said the prices were "unsustainable" for the industry, which would have to make higher investments in rolling out networks in rural areas.
Rajiv Bawa, chief representative officer of Telenor, which lost all its permits following the Supreme Court's February 2 verdict, said the regulator's proposal was in stark contrast to the court's order that the government should redistribute all 122 permits through auction and that Trai should come up with a mechanism to hold the auction.
"Even before discussing price, this first has to be an auction that obeys the Supereme Court order," Bawa said, adding, "The Court did not intend to evict new operators from India. In fact, its explicit directions were to allow us to win back our licenses through auctions. These recommendations are in effect asking the government to evict all but one new operator." Telenor will file an interim application in the Supreme Court against the regulator's recommendations.
The telecom chiefs have said that all available spectrum should be put out for auction to prevent creation of artificial scarcity and allow the market to discover its true price. The telcos have sought that the base price of spectrum be reduced by 80% to a more feasible bidding figure.
The business heads also urged the government to reject the proposal that the 900 MHz band, considered the most cost-effective for 2G services, be redistributed or re-farmed amongst all operators through auctions. Trai had said that the spectrum available with incumbents in the 900-MHz band should be replaced by spectrum in the 1,800-MHz band, which should be charged at the price prevalent at the time of re-farming.
Holding back about 80% of the available spectrum will result in an unrealistic and inflated market value because of artificial scarcity. The telecom chiefs also demanded that the Trai's rollout obligations on auctioned spectrum be done away with.
On Wednesday, a delegation including Bharti Airtel chairman Sunil Mittal, AV Birla group chairman KM Birla, Vodafone Group chief executive Vittorio Colao, and Telenor Group president and CEO Jon Fredrik Baksaas met Finance Minister Pranab Mukherjee, Telecom Minister Kapil Sibal, Home Minister P Chidambaram, representatives from the Prime Minister's Office and four other policy makers to convey their views.
TOI
At a joint media briefing, the chief executives of Bharti Airtel, Vodafone, Idea Cellular, Telenor-owned Uninor and Videocon said the proposals made by the Telecom Regulatory Authority of India (Trai) could prove to be the "death-knell" for an industry considered the poster-child of the Indian economy.
Sanjay Kapoor, chief executive office of the country's largest telecom operator, Bharti Airtel, and chairman of lobby group COAI, said that Trai's latest suggestions would "make the business case even more awful" for telcos that are pressured by high debt and thinning margins.
"The implications of this change could be anywhere as high as 100% of the existing rates, which would have to be compensated by customers," Kapoor said, adding, "This would vary from circle to circle... We know this could play havoc in a price-sensitive market like ours."
Terming Trai's calculation that tariffs would go up by only 2 paise a minute annually as "away from reality", he said mobile telephony prices could jump even higher if re-farming was taken into account.
Trai had said that the spectrum available with incumbents in the 900-MHz band should be replaced by spectrum in the 1,800-MHz band, which should be charged at the price prevalent at the time of re-farming.
On April 23, Trai proposed a reserve price of Rs 3,622 crore per unit of spectrum at the pan-India level for auction, which is 13 times higher than the price paid for getting 2G licences in 2008. The regulator proposed to auction only 5 Mhz of spectrum in the first lot, which meant that only one player will be able to secure new mobile permits.
Telcos would have to cough up more than Rs 18,000 crore to get 5 MHz of spectrum just to begin operations. This would collectively cost the industry tens of thousands of crores, said Idea Cellular's managing director Himanshu Kapania. "It's a make or break amount for us... I don't know how many will have the might to come back and bid," he said.
Kapoor said the prices were "unsustainable" for the industry, which would have to make higher investments in rolling out networks in rural areas.
Rajiv Bawa, chief representative officer of Telenor, which lost all its permits following the Supreme Court's February 2 verdict, said the regulator's proposal was in stark contrast to the court's order that the government should redistribute all 122 permits through auction and that Trai should come up with a mechanism to hold the auction.
"Even before discussing price, this first has to be an auction that obeys the Supereme Court order," Bawa said, adding, "The Court did not intend to evict new operators from India. In fact, its explicit directions were to allow us to win back our licenses through auctions. These recommendations are in effect asking the government to evict all but one new operator." Telenor will file an interim application in the Supreme Court against the regulator's recommendations.
The telecom chiefs have said that all available spectrum should be put out for auction to prevent creation of artificial scarcity and allow the market to discover its true price. The telcos have sought that the base price of spectrum be reduced by 80% to a more feasible bidding figure.
The business heads also urged the government to reject the proposal that the 900 MHz band, considered the most cost-effective for 2G services, be redistributed or re-farmed amongst all operators through auctions. Trai had said that the spectrum available with incumbents in the 900-MHz band should be replaced by spectrum in the 1,800-MHz band, which should be charged at the price prevalent at the time of re-farming.
Holding back about 80% of the available spectrum will result in an unrealistic and inflated market value because of artificial scarcity. The telecom chiefs also demanded that the Trai's rollout obligations on auctioned spectrum be done away with.
On Wednesday, a delegation including Bharti Airtel chairman Sunil Mittal, AV Birla group chairman KM Birla, Vodafone Group chief executive Vittorio Colao, and Telenor Group president and CEO Jon Fredrik Baksaas met Finance Minister Pranab Mukherjee, Telecom Minister Kapil Sibal, Home Minister P Chidambaram, representatives from the Prime Minister's Office and four other policy makers to convey their views.
TOI
