Telecom companies (telcos) and lobby groups stand divided over the Telecom Regulatory Authority of India (Trai)’s decisions on Monday to cut the 1,800 MHz spectrum reserve price by 60% in key circles, initiate auction-based spectrum refarming and take spectrum trading forward.
Arvind Bali, Videocon’s director and CEO, said, “Trai’s recommendations favour existing players who acquired licences prior to 2008, and penalise new players like us.”
Rajan Matthews, director-general of the Cellular Operators’ Association of India (COAI) that represents GSM operators, said, “After Monday’s decision, the reserve price, which was at 80% of spectrum valuation, would still be too close to the spectrum valuation. The reserve price should not be more than 30%. Trai has failed to provide guaranteed 900 MHz spectrum to incumbents, forcing them to participate in an auction to win back their existing 900 MHz spectrum at the new reserve price.
However, auction participation will be higher due to lower prices as well as flat AGR (adjusted gross revenue) of 3%, including for ISPs (internet service providers), which will promote fair play.”
The last auction in March was boycotted by most operators due to the perceived unaffordable reserve price. However, the single bidder in that auction, MTS (Sistema Shyam), which won spectrum in eight circles, will not be able to participate in the upcoming auctions, where the 800 MHz (CDMA) band has been left out by Trai.
Lamenting this, Ashok Sud, secretary-general of the Association of Unified Telecom Service Providers of India (AUSPI, a CDMA lobby), said, “We are also dismayed that Trai has consented to GSM demands by suggesting that a part of the 800 MHz spectrum be carved out for the extended GSM band (e-GSM). These two issues make it very difficult for CDMA operators to grow their operations or buy more spectrum.”
It is not criticism all the way though. Neeraj Jain, senior director, Deloitte in India, for one, thinks Trai is heading in the right direction. “The DoT (department of telecommunications) has been asked to provide a clear roadmap for spectrum quantum and a time-line for various auctions in future. But Trai has not specified a time horizon.”
Prashant Singhal, partner, EY, said, “The high cost of participation in the 900 MHz auction will be passed on to consumers in the form of increased tariff. As for spectrum trading, it is a good move, but the industry take-up is yet to be evaluated. Also, adjustments need to be made in the case of operators that have already paid at higher levels.”
Most agreed that an open auction for 900 MHz offers a good opportunity for cash-rich greenfield operators like Uninor, Videocon and MTS. But Yogesh Malik, CEO of Uninor, said the company is happy with 1,800 MHz spectrum and would consider more options at the right time. Uninor may well use technology-neutral spectrum for 3G or 4G in future, he said.
Videocon’s Bali said, “The spectrum that we recently acquired has already become cheaper. We strongly recommend that the excess money paid by us (that is, the difference between the price paid and the successful bid price of the upcoming auction) should be refunded either in monetary terms or through additional spectrum.”
Both GSM and CDMA players have appealed to the DoT to consider their situation based on Trai’s recommendations on Monday, after which the Telecom Commission will finally come out with the final auction guidelines.
The 1,800 and 900 MHz auctions are now expected as late as the year-end or early next year.