NEW DELHI: Offering a glimmer of hope to telecom operators, the sector’s highest decision-making body has refused to endorse regulator Trai’s controversial proposals that included a 13-fold increase in the base price for spectrum auctions.
The Telecom Commission on Monday said it will soon seek clarity from Trai on four of its key recommendations. “We will write to Trai no later than May 2 on four issues,” Telecom Secretary R Chandrashekhar said.
“The first relates to its recommendations to auction only 5 MHz of airwaves that restricts the sale process to just one slot. We also want the regulator to clarify how it arrived at the base price for the spectrum auctions and its impact on tariffs,” he said.
The commission will also ask Trai to explain its proposals of mandating rollout obligations (setting up towers in certain number of locations) and refarming (distribution of airwaves in the 900 MHz band that is largely held by incumbents). Under the Trai Act, the regulator is required to revisit its recommendations and come back to the government within two weeks, Chandrasekhar said.
He said the commission decided to go back to Trai after considering the views of its members as well as representations from the industry, which unanimously criticised the proposals. Last week Trai had proposed a 13-fold increase in spectrum prices compared to 2008 and limiting the airwaves sale to a mere 5 MHz in the 1800 MHz band this year, a move that allows only one company to win back its permit.
Most operators have termed the proposals as “flawed, retrograde, regressive” and warned that their implementation would harm consumer interests and lead to prolonged disputes and litigation. The telecom department cannot reject or alter Trai’s suggestions without asking the regulator to revisit its recommendations. Another member of the commission said they will also ask Trai to explain why it has sought delay of 4G auctions.
“Trai has said that 4G auctions must happen in 2014-15 when the ecosystem matures. If that is the case, why did it recommend the base price for frequencies now?” this member asked.Norway’s Telenor, meanwhile, said it was taking a writedown on its remaining Indian assets valued at 3.9 billion Norwegian crowns (approx Rs 3,577 crore) and added that Trai’s recommendations had increased the uncertainty in the sector significantly.
Following the Supreme Court’s February 2 orders, which quashed all licences awarded in the controversial 2008 sale by former telecom minister A Raja, Telenor had already written down 4.2 billion crowns (Rs 3,852 crore) related to its Indian assets.
“As a precautionary measure, Telenor ASA has decided to write down the remaining fixed and intangible assets in India amounting to NOK 3.9 billion (NOK 2.6 billion after non-controlling interests). The writedown will be included in Telenor’s results for the first quarter 2012, to be presented on May 8,” said a Telenor Group spokesman.
After the write down, the firm had no further accounting exposure related to India, as of March 31. ET on Monday reported that Telenor had warned that it would exit India if the government accepts Trai’s proposals, especially on the quantum of airwaves to be sold and the rollout obligations.
Telecom Commission’s Chandrashekhar said it wanted clarity on the number of slots to be auctioned. While nine companies have lost licences after the court decision, 5 MHz of airwaves is sufficient only for one operator.
“Trai said that auctioning more than 5 MHz in the 1800 MHz band would impact refarming (redistribution of 900 MHz band and substituting this with frequencies in the 1800 MHz band). We want Trai to clarify if the quantum of spectrum reserved for refarming can be reduced. We also want clarity on modalities of refarming. But this does not imply that we are against refarming,” Chandrashekhar said.
He said the Telecom Commission will meet again after mid-May to consider Trai’s response.
The Empowered Group of Ministers headed by finance minister Pranab Mukherjee will take a final call on all issues related to the spectrum auctions. This EGoM was scheduled to meet on May 2, but this may be deferred. “The EGoM can take a decision only after the telecom ministry sends its views to it,” a telecom ministry official said.
Last week, the chief executives of Bharti Airtel, Vodafone, Idea, Uninor and Videocon, in a joint communication to telecom minister Kapil Sibal, alleged that the regulator had not carried out any study to examine the socio-techno-economic aspects and ignored contractual and other rights of the affected operators in its recommendations on refarming
In a related development, international news wires reported that foreign companies plan to not participate inIndia’s upcoming spectrum auctions. These reports said Australia’s Telstra and Sweden’s Telia Sonera will not bid in the auctions.The SC last week ordered the government to conduct 2G spectrum auctions by August 31, rejecting the Centre’s plea that it required 400 days to complete the process. It allowed the nine mobile companies whose licences were cancelled to continue operations till September 7.