The Supreme Court’s decision to cancel licences given on or January 10, 2008 has sounded the death knell for most of the 2G players. While players such as Etisalat DB and Stel have shut shop others such as Videocon and Uninor are just about keeping their operations running.
The uncertainty over the auction rules is only adding to their woes. Videocon, which has 7.7 million subscribers across 20 circles, claims to be losing Rs 150 crore a month to keep networks operational.
What is your view on the reserve price of Rs 18,000 crore for 5 MHz spectrum proposed by Trai?
The apex court, while cancelling 122 licenses, had directed the Telecom Regulatory Authority of India (Trai) to determine 2G spectrum price through auction process.
Trai, however, on its own added multiple dimensions (without consulting the industry) like making it technology-neutral, putting up only single block of 5 MHz up for auction, etc. in order to justify higher value of spectrum. These recommendations have created artificial scarcity of the spectrum.
To determine the right market value of the spectrum, all the available spectrum should be put for auction at the same time and keep the base price at the last market determined price of 2G spectrum i.e. Rs 1,658 crore. Market forces, in any case, will take the price to its real market value.
What will be Videocon’s strategy during the upcoming auctions? Will you bid in all circles, or will the company bid selectively in just a few circles?
Videocon has gone a long way forward and made huge capital investments in mobile service business. We have done 50 per cent roll-out obligation in all the 20 circles where we got spectrum except for Delhi where no spectrum was awarded to any new operator.
We have a strong workforce of around 8,000 direct and indirect employees to back our operations with a customer base of 7.7 million and still growing.
Now, after having invested so much in the business we shall definitely like to stay and make our presence felt in the business. We will be definitely participating in the upcoming auctions.
We would surely bid and try to win back all our circles. But, as on date there is no clarity on the ‘availability of spectrum for auction’ and the ‘reserved base price’. So we are closely watching the developments and will be formulating our strategy for upcoming auction accordingly.
You say you are keen to stay in business but Videocon has not taken any proactive measures like Uninor and Sistema to assure its existing customers that the company is here to stay. In the process you have also lost a significant number of customers post the Apex Court's orders. Why did the company decide to stay low?
The fact that we have been able to retain our customer base proves that we have been very active in the markets where we operate.
We have been regularly sending SMS to all our customers and channel partners on the commitment of the company to actively participate and win back the spectrum. It is a part of our daily ‘Usage and Retention’ activity.
One won’t see our promotional activities in North India as we don’t have spectrum in Delhi and have not done full fledge commercial launch in the Hindi belt of UP, Rajasthan and Bihar.
Our active business circles are scattered across country and we do region-based spending. We also had TV commercials until the time our licenses were quashed.
What is Videocon’s view on the proposal by the government to ask incumbents to pay the auction determined price prospectively remaining period of the licences prospectively?
According to para-81 of the Apex Court’s judgment the licenses granted to the private respondents on or after January 10, 2008 pursuant to two press releases issued on the same day and subsequent allocation of spectrum to the licenses have been declared illegal and subsequently quashed.
If you see the Trai report and compare it with the list of spectrum issued to the private respondent on or after this date, lots of spectrum which presumably be cancelled in line with the judgment has not been taken in the list of available spectrum by Trai/DoT.
For the last 3-4 weeks so many media reporting has happened on the subject, COAI and various aggrieved companies has gone to Govt, lots of NGOs have taken the cause but still there is no visible action.
So if all operators are made to pay the same price prospectively, it will create a level playing field and bring a cordial and more productive environment in the industry.
There is a debate on permitting auction winners to pay the bid amount in instalments. Why should it be allowed?
Companies like Videocon decided to enter the telecom business based on the licences given at 2008 prices. We have been found clear in all the investigations held by the various Government agencies. Now, if the prices of spectrum are going to be increased ten times or more, it is quite logical to provide staggered payment for the operators to survive and business can be continued.
There are talks about changing roll-out obligations for auction winners. Your comment.
When spectrum is bought at market price, the decision of “where and when” to do the roll out should be left to the operator based on their specific business case. The Government can dictate roll out if it is giving any subsidy or concession to the operators.
Finally, there has been a lot of debate on spectrum mortgage. What is Videocon’s position?
Yes, we are in line with the notion that the spectrum should be seen as a tangible asset and all operators holding spectrum should have exclusive rights to mortgage the same.
tkt@thehindu.co.in