NEW DE:HI: A power-packed delegation of the country’s top telecom chiefs, including the global heads of two leading mobile phone companies on Wednesday met finance minister Pranab Mukherjee, telecoms minister Kapil Sibal, home minister P Chidambaram, representatives from the Prime Minister’s Office and four other key policy makers to demand that the government reject sector regulator Trai’s recommendations on spectrum auction.
Bharti Airtel Chairman Sunil Mittal, A V Birla group chairman K M Birla, Vodafone Group Plc chief executive Vittorio Colao and Telenor Group’s president and CEO Jon Fredrik Baksaas escalated their war with Trai and told senior Cabinet ministers that regulator’s proposals were ‘flawed, retrograde and regressive’ and its implementation would harm consumer interests.
“This has been the most destructive period of regulatory environment I have seen in 16 years. Sector regulator Trai’s recommendations are ‘catastrophic’ for the entire telecom sector,” Mittal said when exiting the communications ministry after the chief executives had met telecoms secretary R Chandrasekhar.
The four top executives also held discussions with commerce minister Anand Sharma, Planning Commission deputy chairman Montek Singh Ahluwalia and Cabinet Secretary Ajit Kumar Seth. They were also scheduled to hold deliberations with Law Minister Salman Khurshid and agriculture minister Sharad Pawar later Wednesday night, executives with two companies said, but ET could not independently establish if these meetings took place.
“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,” Mittal said after stepping out another meeting.
K M Birla echoed industry’s sentiments that the base price for the airwaves auctions was too high for bidding and would lead to higher tariffs. “I don’t think it makes sense to participate in the auction for anyone at these prices… Subscriber will definitely pay much higher tariff if this is the kind of reserve price (accepted by the government),” he said.
Last week, Trai had proposed that mobile phone companies that lost their permits after the Supreme Court cancelled licences awarded in the scandal-tainted 2008 sale, as well as incumbents and other new entrants pay a minimum Rs 3622.18 crore for every unit of 2G spectrum in the upcoming auctions. This is more than 13 times the amount telcos paid in 2008, when former telecom minister A Raja dished out pan-India permits that came bundled with 6.2 MHz of 2G spectrum for a mere Rs 1659 crore.
An executive with a leading mobile phone company said that the chief executives had demanded that the government reject Trai’s proposal that the 900 MHz band, considered the most cost effective for second-generation services, be redistributed or refarmed amongst all operators through auctions. Trai had said that the spectrum available with incumbents in the 900 MHz band should be replaced by spectrum in the 1800 MHz band, which should be charged at the price prevalent at the time of refarming.
They also sought that all airwaves in the 1800 MHz band be put up for auctions and reiterated their stance that reserve price be slashed by 80% to allow the market to discover the ‘true’ price.
In their meeting, the chief executives argued that holding back about 80% of the available spectrum and placing only 5MHz for auction in each service area, will result in a totally unrealistic and inflated market value caused through creation of artificial scarcity, this executive added. He further said that the four companies had also warned cabinet ministers and government officials that that the high cost for spectrum would rob operators of resources required for network rollouts, a move that would push back the industry back by several years. They have also asked the ministers to do away with Trai’s rollout obligations, he said.
Telenor Group president and CEO Jon Fredrik Baksaas said the objective of the meetings were to draw the government’s attention the disastrous impact of Trai’s recommendations on the company’s ability to continue operations inIndia.
“We urge the Indian Government to take its rightful political initiative now. This is the time to ensure that the policy made for license auctions allows affordability, competition and investments to remain inIndia,” he added.
On Tuesday Telenor (which operates under the Uninor brand inIndia) said it would file an interim application with the Supreme Court against the sector regulator Trai’s recent recommendations on auctioning airwaves. The mobile phone company has contended that Trai’s recommendations to auction airwaves at 13 time the price in 2008 and limit the spectrum sale to a mere 5 MHz in the 1800 Mhz band, where Telenor operates, a quantum of airwaves sufficient for only one company to operate, were ‘not in line’ with the court’s February 2 orders.
On Monday, Telenor had said it was taking a write-down 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.
“On issues such as only a limited 5 Mhz spectrum available in the auctions, regressive rollout obligations and high reserve price, the recommendations have entirely ignored the submissions made by all mobile operators during the Trai consultations,” Baksaas said in a statement on Wednesday. He further said that the government alone carried political responsibility and therefore had the final say on policy. “India must remain an attractive destination for all foreign investors across industries, not only because of the growth potential it indeed offers, but also its predictable, logical and investor friendly policy environment,” the elenor Group president and CEO added.
Telecoms minister Kapil Sibal said that the government would look into the concerns raised by telecom companies.
“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,” he said.