Telcos raise concerns over falling revenues

Major telecom companies have expressed concerns over the policy framework in the country, de-growth in revenue that they are facing, and fragmented frequency allocation for both 2G and 3G services in their respective letters to chairman of the Telecom Regulatory Authority of India (Trai) J S Sarma.

The telcos' input is in reply to a Trai consultation paper on spectrum management policy, and it may have a bearing on the auction of 3G spectrum.

Idea Cellular is quite clear in stating that "it is very desirable that at least the broad contours of the final policy emanating from this consultation paper be known before actual bidding for 3G auctions. This would be a pre-requisite for an international standard auction."

If Trai and the government listen to Idea's advice, the 3G auction would have to be deferred once again, as the regulator would need time to finalise its recommendation on the spectrum management policy. 

Reliance Communications has told the regulator that the telecom sector is facing challenging times. A number of operators are witnessing de-growth in revenue despite low rural penetration, it has said.

Vodafone has said that the total spectrum made available to the mobile industry in India is far lower than any other market.  "This has resulted in highly fragmented spectrum allocations to individual operators. This policy is certain to have left many operators sub-scale, and increased the costs of network deployment and operations for all operators well above the costs of efficient scale operators in other markets," Vodafone has said.

The telco said the long-term consequences of this situation are beginning to emerge with listed telecoms company market capitalisations falling rapidly, market and operator revenues stagnating/ declining, and profit falling. "The number of operators currently in the market is clearly unsustainable."

Bharti Airtel has said India needs to have a short- and long-term plan for meeting spectrum requirements. While RCom has argued that there's no justification for allocation of spectrum beyond the contracted 6.2 MHz and that spectrum beyond 6.2 MHz should be returned by telcos within three months, Bharti has countered by saying that in the Indian telecom sector there's no instance of having the spectrum beyond the specified limit.

"Operators have been allocated spectrum after meeting the eligibility criterion strictly as per guidelines… Thus, no question arises for any spectrum to be taken back or be subjected to any higher charging regime," Bharti has told Trai.

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