In response to Spectrum Auction questions raised by the DoT, TRAI defends its position of High Reserve Price for Telecom Spectrum as well as its recommendations on re-farming etc. Analysts had expected TRAI to soften its stand a bit, but the regulator put its foot forward and had defended the same. Having tracked the Indian Telecom sector for over a decade, I am of the opinion that the reserve price is too high – 8x higher for 1,800 MHz than the global average spectrum auction pricing of US$79mn.
After all the Auction of Spectrum at these Reserved Prices, the Government must be able to collect close to USD 65 Bn, which is more than the collective Telecom Industry Revenue 🙂 At this stage I’d still say this is impossible and unlikely to happen.
Shakeout Inevitable: High spectrum fees may force the not so serious or not deep-pocketed players to leave the industry and force consolidation. The industry could return to the mode of negative free cash flow. Tariff hikes will be across the board from Metros to C-Circle. Dual-spectrum operators could be hit the hardest, because they would have to pay up for all the spectrum they have – GSM and CDMA – whenever it comes up for renewal and prices are simply exorbitant.
However, one thing is certain, neither DoT nor the Ministry of Communications & IT housings Bureaucrats and Politicians of repute with the Largest Scam in Independent India to their credit, Honb’le Supreme Court will be watching every move of these Corrupt Babus & Netas during the Spectrum Auction, so they better behave responsibly or Tihar is a close destination for them 😉
TRAI Fires the Interconnect Tariffs Missile At a time when the industry is already under immense pressure, TRAI has fired a fresh missile inviting comments on the revision of Interconnect Tariffs.
In my view, the interconnect tariffs will be heading to Zero in the next 2 to 3 years and this will have a bad impact on the revenues of Incumbent operators [Airtel, Vodafone, BSNL, Idea] where they will be at the receiving end.