CEOs of five telecom companies have written to the Telecom Minister, Mr Kapil Sibal, saying that the reserve price proposed by the telecom regulator should be reduced by at least 80 per cent.
Honchos of new players Uninor and Videocon joined leaders of incumbent operators Airtel, Idea Cellular and Vodafone to send a letter to Mr Sibal in which they said that if the auction is held at the proposed price then mobile tariffs will go up by 25-30 per cent.
The telecom companies sent a 5-point demand to the Minister including putting all available spectrum on the block as against just 5 Mhz suggested by the Telecom Regulatory Authority of India.
“Holding back 80 per cent of the available spectrum will result in a totally unrealistic and inflated market value caused through creation of artificial scarcity. By severely throttling the supply to 5 Mhz, TRAI is trying to artificially distort the auction result,” the joint letter signed by the five CEOs said.
“The high cost of spectrum will translate into a much higher tariff for consumers. It is estimated that tariffs will go up by at least 25-30 per cent. The high auction price, if at all paid, will not leave any resource in the hands of the operators to do the required network rollouts,” the letter stated. The TRAI has pegged the base price for 1800 Mhz frequency band at 10 times the price in 2010.
The operators said the TRAI proposal, if accepted, will sound the death knell for Indian telecommunications and also lead to prolonged disputes and litigation. The Indian telecom companies meanwhile got international support. Mr Franco Bernabè, Chairman and CEO of Telecom Italia Group, said in a separate statement that efforts to squeeze money out of mobile operators for some perceived short-term gain will only reduce investment in networks.