Mobile operators, both GSM and CDMA players, said that the recommendations made by the Telecom Regulatory Authority of India were regressive and will deal a blow to the industry if implemented.
In a rare show of unity, the Cellular Operators' Association of India and the Association of Unified Telecom Service Providers of India, in a joint statement expressed their concern and disapproval of these recommendations and termed them as being arbitrary, regressive and inconsistent
“The industry was looking forward to reasonable spectrum reserve price recommendations from TRAI in the light of the Government's own articulated policy directions on affordability, rural penetration,” the two industry associations said.
“The industry has repeatedly been facing contradictory and regressive approach from the Regulator which is detrimental to the future of the sector that is often touted as the poster boy of India's economic reforms. From deciding to link the price of 2G spectrum to 3G spectrum auctions, to its own expert committee's inputs without the application of any logic; and unilaterally trying to interpret DoT's own licence terms like ‘extension' as ‘renewal', the Regulator's actions appear to be unfair and biased against all operators for reasons best known to it,” the operators said.
Big worry
The big worry for the operators is the huge payout they face as a result of the recommendations. According to industry estimates, Bharti's total liability will be in the range of Rs 30,000 crore in 2013-15 to retain existing spectrum where its licenses are expiring, Vodafone's total liability is around Rs 45,000 crore and for Idea it is Rs 21,000 crore.
“The Indian telecom sector is reeling under hyper competition due to overcapacity and is under cash strain due to high prices paid for 3G spectrum and capital intensive nature of the industry. The new guidelines on spectrum — if accepted by Government in totality, then the business models by the incumbents and new operators would have to be redrawn as operators would have to pay significantly higher price for the spectrum which may ultimately lead to upward revision in tariffs,” said Mr Hemant Joshi, Partner, Deloitte Haskins & Sells.
“We believe that several of these recommendations are retrograde and if accepted, will do irreparable harm to the industry. It will hamper the ability to connect the unconnected and goes against the objectives of National Telecom Policy of ensuring improved rural tele-density and right to broadband,” Vodafone said.
The proposal to keep the auction open to all players is bad news for the new players who were hoping to have a restricted auction limited to only those players whose licences were being cancelled. “It is against the grain of the Supreme Court judgement which was basically meant for 2008 licences. It treats the cancelled licences unfairly. The reserve price is over-ambitious, especially when you are going for an auction,” said Mr B. K. Syngal, Senior Principal, Dua Consulting.