‘Recommendations could spell the death knell for the industry'
Rankled by Telecom Regulatory Authority of India's recommendations on 2G spectrum auction, telecom companies, on Wednesday, made a joint pitch to top government functionaries, including Home Minister P. Chidambaram and Finance Minister Pranab Mukherjee, for not accepting the ‘catastrophic' recipe of the industry watchdog.
Bharti Airtel Chairman Sunil Mittal, Vodafone Chief Executive Vittorio Colao, Idea Cellular Chairman Kumar Mangalam Birla and Telenor Chief Executive Officer Jon Fredrik Baksaas first made their case with Mr. Chidambram and Mr. Mukhejree and, then, followed it up with meetings with Planning Commission Deputy Chairman Montek Singh Ahluwalia and Telecom Minister Kapil Sibal.
They also met Pulok Chatterji, Principal Secretary in the Prime Minister's Office, and also Commerce Minister Anand Sharma besides a host of top bureaucrats, including secretaries to the department of telecom and commerce.
“This has been the most destructive period of regulatory environment I have seen in 16 years,” Mr. Mittal said, saying TRAI recommendations would be ‘catastrophic' for the entire telecom sector.
Mr. Baksaas said the auction policy should be catalyst for “affordability, competition and investments” rather than leading to tariff hikes as would be the case with TRAI setting a high base price for the auction.
“If the decisions are taken in the interest of the industry, they (TRAI recommendations) have to be changed. I think the current recommendations will kill the industry,” Mr. Birla said.
TRAI has suggested a base price of Rs.3,622 crore for one megahertz (MHz) for pan-India spectrum, which is around 10 times higher than the price at which 2G licences bundled with 4.4 MHz spectrum were allocated in 2008 under the then Telecom Minister A. Raja.
According to TRAI, a minimum of 5 Mhz spectrum should be allotted, which means that pan-India airwaves in 1800 MHz band will cost Rs.18,000 crore.
“We presented our case to leadership and senior ministers in the government... this industry is vital for the nation and the TRAI recommendations could spell the death knell for the industry,” Mr. Mittal told reporters here.
The objective of the meeting was to bring to the government's attention the ‘disastrous' impact of the recommendations will have on the ability of operators to continue their operations.
Asked if Idea will participate in the forthcoming 2G auction, Mr. Birla said: “I don't think it makes sense to participate in the auction for anyone at these prices.”
“The subscriber will definitely pay much higher tariff if this is the kind of reserve price (accepted by the government),” he said.
On tariff hike, Mr. Mittal said the country's leadership wanted affordable tariff. “Recommendations (of TRAI) fly on the face of that aspiration of the government to give affordable tariff.”
“Where is the question, (if) there is no industry, there is no consumer, everything goes hand in hand,” he said.
Telenor Group President and CEO Jon Fredrik Baksaas said the government alone carried political responsibility and, therefore, the final say on policy.
“We urge the Indian Government to take its rightful political initiative now. This is the time to ensure that the policy, made for licence auctions, allows affordability, competition and investments to remain in India,” Telenor CEO added.
Asked about the government's response, Mr. Birla said, “I think the government has said that they are examining the issue thoroughly before giving go ahead to any decision.”
Mr. Sibal assured the heads of telecom companies that the government would look into their concerns.
“Telecom operators met me and we had full discussion. They expressed concern regarding TRAI recommendations and I said we will certainly look into the matter,” Mr. Sibal said.
Keywords: 2G spectrum auction