The Telecom Regulatory Authority of India has told Department of Telecom that the proposed reserve price for 2G spectrum auction will not have any adverse impact on the industry.
The telecom regulator has said that that the recommended price ensures that the full value of the spectrum is realised to the Government. TRAI has estimated the value to be about Rs 7 lakh crore.
“This will not compromise the profitability of the industry, or adversely affect the affordability to the consumer,” the TRAI said in its response to a joint letter written by four CEOs of telecom companies.
The CEOs had written to the Government on May 2 claiming that the TRAI proposals will hit the operators' revenues. “EBITDA and Return on Capital Employed show a very healthy and increasing trend over the next 20 years. The Internal Rate of Return are also robust,” the TRAI has told the Department of Telecom, in reply to the joint letter from the telecom companies.
The regulator said that keeping the spectrum price indexed to 2001 price or to the 3G reserve price would tantamount to giving nation's resource at a low price to the operators, which is exactly what was frowned upon by the Supreme Court. TRAI had earlier proposed a reserve price of Rs 18,000 crore for 5 Mhz spectrum, which the operators said was astronomically high. The stand taken by the regulator assumes significance because the Telecom Commission has sought TRAI's analysis on the impact of its 2G proposals on consumers, industry and Government revenue.
Responding to the operators' criticism on re-farming 900 Mhz spectrum band, the telecom regulator said that the value of 800 Mhz and 900 Mhz bands is of the order of Rs 3 lakh crore and it would be a case of missed opportunity if re-farming is not done at this stage. The Telecom Commission has also asked TRAI's analysis on similar issues.