Pricing led to missed opportunity: Telcos

Govt open to re-auctioning unsold airwaves

A day after the spectrum auction ended amid tepid response by telcos, the government on Friday said it would consider re-auctioning spectrum that remained unsold. The government raised Rs 65,789 crore from spectrum, but there were no takers for the most-efficient and priciest 700-megahertz band and only 40 per cent of the total airwaves on offer were sold.

Bharti Airtel Chairman Sunil Bharti Mittal said pricing of 700-MHz was exorbitant. "Nearly Rs 60,000 crore for a small 5 MHz was bound to get no response. Nobody should be surprised… Three or four solid networks around 700-MHz would have taken care of a lot of rural broadband networks. This is a missed opportunity. I hope the government will look into this and correct that particular part (pricing)." Mittal was speaking at the India Economic Summit organised by the World Economic Forum.

When asked if service quality will improve now as more airwaves are available, Mittal said: "In the coming months, you will see massive improvement across the country, not just from my company but all the industry players who have participated in the auction."

Himanshu Kapania, managing director, Idea Cellular told Business Standard his company was eyeing up to 40 per cent revenue from data services with 4G foray in 1,800-MHz band. "In the 4G space, the eco-system is prevalent on 1,800-MHz globally. Unless there is a real rethink on the part of the government and the 700-MHz price is below that of the 1,800-MHz spectrum, there is no value in participating in any procurement of the 700-MHz band," he said.

"There is going to be a tsunami of customers who will upgrade their existing usage of pure voice to voice plus data. In the next three-four years, we are expecting that from the current level of 125 million users, there will be about 500 mn who will use 3G or 4G services," Kapania added.

Vodafone India said it would spend Rs 20,280 crore on the spectrum it has acquired in all its key telecom circles. Sunil Sood, managing director and CEO, Vodafone India, said, "We are happy with the outcome of our spectrum purchases in the auction. This enables us to provide our customers broadband services across India with multi-band high capacity capability in our strong circles."

On questions of re-auction in near future, Telecom Minister Manoj Sinha said, "If their (telcos') financial situation is not good, and they can't buy it now, what is the guarantee that they will be able to if we do another auction immediately… We will take the appropriate decision at the appropriate time."

"We have heard industry's view but the pricing was decided by a mechanism… the other thing is that appropriate ecosystem (for the band) is also not yet developed. Both reasons were there," he added.

Japanese brokerage Nomura said even if the government agrees to the telcos' demand of doing a fresh auction of spectrum in the 700-MHz band at a lower price, the sale is unlikely to happen in this year.

Telecoms services in India are among the cheapest in the world, making margins relatively lower than elsewhere and putting pressure on carriers' finances, with ratings agency ICRA forecasting their combined debt to rise to Rs 425,000 crore after funding the latest sale.

Telecoms Secretary J S Deepak said the ministry was on course to achieve its revenue target set by the finance ministry, despite earning far less than the budgeted Rs 64,000 crore from the auction. Deepak said the government will decide later on whether to consider cutting the price of the 700-MHz airwaves.