Top guns of Indian telecom known more for cut-throat competition than cooperation on Wednesday closed ranks to fight impending regulation which they fear will destroy the industry. In an open and unprecedented declaration of distrust in the regulator never seen in its history, the telecom CEOs met senior ministers and officials of a government panel that will decide on the regulator’s controversial recommendations on auctioning wireless spectrum.
The eventful day saw Bharti Airtel’s chairman and managing director Sunil Mittal, Vodafone’s group CEO Vittorio Colao, Idea Cellular chairman Kumar Mangalam Birla and Telenor group CEO Jon Fredrik Baksaas meeting telecom minister Kapil Sibal, finance minister Pranab Mukherjee, home minister P Chidambaram, agriculture minister Sharad Pawar, Planning Commission deputy chairman Montek Singh Ahluwalia, telecom secretary R Chandrasekhar and PMO officials to present their case against the telecom regulator. Though the CEOs of Reliance Communications and Tata Teleservices did not turn up, their industry association Auspi wrote to Sibal criticising the recommendations of the Telecom Regulatory Authority of India (Trai).
All the ministers and officials are part of the empowered group of ministers that takes the final call on Trai’s recommendations. The CEOs opposed Trai?s proposals and urged the political leadership to do its duty by junking them and safeguarding the industry which has contributed handsomely to the country?s growth.
On Thursday, the CEOs will jointly address the media under the umbrella of the Cellular Operators Association of India (COAI.)
At the announcement of Bharti?s earnings earlier in the day, Mittal broke his habit of referring questions about regulation to the industry body, saying, ?Recent regulatory developments in India will have significant implications on the future of telephony and broadband, as well as India?s global competitiveness. The entire industry looks to the government for a fair, transparent and sustainable telecom regime.?
After meeting the telecom secretary, Mittal was equally harsh, telling reporters that the recommendations would be catastrophic for the entire sector. ?This has been the most destructive period of regulatory environment I have seen in 16 years,? he said. Asked how the company is responding to the proposals, Mittal said: ?We are dealing with this.? Later, after meeting Mukherjee, Mittal said: ?We have presented our case to the government. These recommendations are a death knell for the industry.?
This country’s leadership wants affordable tariffs for its consumers and these recommendations will not work?.
Emerging from the same meeting, Birla said: ?We talked to the government about pricing spectrum. I don’t think it makes sense for anyone to participate in the bids at the recommended base price. Consumers may have to pay more if spectrum is sold at these rates.?
Telenor’s Baksaas echoed these views: ?It is the government alone that carries political responsibility and therefore has the final say on policy. We urge the Indian government to take its rightful political initiative now. This is the time to ensure that the policy made for the telecom licence auctions allows affordability, competition and investments to remain in India. 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.? These recommendations will have severe consequences for the industry, Baksaas added.
So, what has united the country’s fractious telecom industry? It is the recent recommendations of Trai, which has set a base price for 2G spectrum in the 1,800 MHz band for a pan-India level at Rs 18,110 crore. Though incumbent operators like Bharti, Vodafone and Idea have the luxury of not participating in the auctions, the problem is that in the next few years, their 20-year licences comes up for renewal. At that time, these companies must pay the bid amount for renewing the spectrum they hold. As per rough estimates, this would entail the three jointly paying above Rs 90,000 crore as spectrum renewal fee. Further, these companies, by being early entrants also have 900 MHz of GSM spectrum which is more efficient. Trai has suggested that this be taken back and given the 1,800 MHz band in lieu of it. The 900 MHz spectrum can then be put up for auctions at double the reserve price of 1,800 MHz band. This will hit the companies since the entire network planning must be done again.
For Telenor, the 22-circle licences which its India operations Uninor holds has been cancelled by the Supreme Court’s February 2 verdict. The company, which has invested Rs 14,000 crore so far in its India operations and has some 40 million subscribers, can only stay put in the country once the spectrum is auctioned as per SC’s directions. However, Trai has made it impossible for it by setting a steep base price and by opening the auctions to existing as well as newer players while putting up only 5 Mhz, enough for just one operator.
