Operators urge Sibal to auction total spectrum, reduce reserve price

New Delhi, April 27 (IANS) Terming the telecom regulator's recommendation on spectrum auction as flawed and retrograde, leading telecom operators, including Bharti Airtel and Vodafone, have urged Communications Minister Kapil Sibal to ensure that the reserve price is reduced by about 80 percent and all available spectrum are auctioned.

The Telecom Regulatory Authority of India (TRAI) has proposed a reserve price of Rs.3,622 crore for a megahertz of spectrum at pan-India level. This is around 10 times higher than the price for 2G licences in 2008.

"Such flawed and retrograde, regressive and uncertain recommendations, if accepted, will irretrievably harm consumer interests, ring the death knell for Indian telecommunications and also lead to prolonged disputes and litigation," the operators said in a letter to Sibal.

"Further, the reserve prices recommended by TRAI for different bands of spectrum are exorbitantly high and unrealistic. TRAI has failed to appreciate that such high prices are completely unsustainable in a highly price sensitive market such as India," it added.

India has an average revenue per user of less than Rs.90 and has a poor rural teledensity and requires huge investments to rollout networks in rural and remote areas, according to operators, who contend that the high cost of spectrum will translate into much higher tariff for consumers.

"It is estimated that tariffs will go up by at least 25-30 percent. 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. In fact, it is likely to push back the industry by several years, thus compromising both the connectivity as well as broadband agenda of the country," the letter said.

According to the operators if the reserve price is reduced to a reasonable level, it would allow the market to discover the true spectrum price.

On TRAI's recommendation of refarming spectrum, the operators have also said that they are fine with the already available technology-neutrality and have asked the minister to reject the TRAI recommendations for "refarming".

The letter has been signed by Sanjay Kapoor, CEO, India and South Asia, Bharti Airtel; Himanshu Kapania, MD, Idea Cellular; Sigve Brekke, CEO, Uninor; Arvind Bali, director and CEO, Videocon Telecommunications and Marten Pieters, MD and CEO, Vodafone India.

Referring to recent downgrading on India's rating by Standard and Poor's, the letter said it is an indication of the poor investor sentiment that is troubling the market.

"The growth story had, till recently been quite compelling, but, current trends indicate significant reversal in key financial and operating parameters and a strong decline in investor confidence," the letter said.

"Under these circumstances, there is a pressing need for swift and bold policy initiatives from the government to restore investor confidence, business sustainability and public interest," it added.