The Indian Telecommunications Industry is Divided between the A-Vo-Id[Airtel, Vodafone Idea] Group on one side and the politically influential Ambani brothers on the other. Recently all telcos submitted their response to the TRAI’s consultation paper on Valuation and Reserve Price of Spectrum. The responses are as expected with A-Vo-Id Group arguing for no spectrum re-farming, a sharp reduction in spectrum prices and a sharp decline in spectrum usage charges. On the other hand, Deeply Debt Laden Reliance Communications along with Reliance Jio have argued for a complete re-farming of spectrum in 900 MHz but not the 800MHz. After going through each of the Comments, here we summarize the contentions of A-Vo-Id Group operators, Reliance Jio, RCom and others if any on Spectrum Related Issues for the forthcoming auction.
Method for spectrum pricing
–Vodafone Suggests using the reserve price for 2100 Mhz in 2010, with some minor adjustments resulting from Nov 2012 auction. Suggests 58% reduction in reserve prices
–Airtel is for Reduction in reserve prices from Nov 2012 and Mar 2013 auctions, which should be corroborated by DCF valuation for each circle.
–RCom Suggests using the present auction determined price for 18 circles. For remaining 4 circles, pricing to be determined on basis of CDMA pricing
–Reliance Jio Infocomm Suggests using the present auction determined price for 18 circles. For remaining 4 circles, indexed 3G auction pricing should be used.
–Tata DoCoMo Bottom-up valuation of spectrum capturing unique potential of each circle. Price of 900MHz should be 2x 1,800Mhz
Spectrum reserve price versus valuation
Vodafone Suggests tha Benchmark ratios have an upward bias. After certain exclusions, the ratio falls to 33%.
Airtel & Tata DoCoMo Recommend 45% and 50% of the value respectively.
Idea Cellular for international benchmarking
RCom – 100% Ratio
Reliance Jio Infocomm – 80% Ratio
Aircel – Start Low
Spectrum refarming 900 Mhz band – A-Vo-ID Group Vote against it while Reliance Jio Infocomm, Reliance Communications, Tata DoCoMo and Aircel are in favor of refarming.
Adoption of E-GSM band/ extension of 900 MHz band – Vodafone argues in favor and suggests that 10Mhz of E-SGSM
band can be added in 11 circles. Aircel, Idea and Airtel in favor. RCom, Tata DoCoMo and Reliance Jio do not favor the same.
Spectrum Trading – A-Vo-ID Group, Aircel and Tata DoCoMo in Favor while RCom Opposes the same and Reliance jIo calls for Detailed Discussion.
Spectrum liberalization A-Vo-Id, RCom, Reliance Jio make a case that existing spectrum is already liberalized. Tata DoDoMo says that it can be liberalized by paying the auction determined prices. Aircel is against the concept.
These are the views of Operators and let us wait for few more days on what TRAI will recommend to the DoT and what the DoT finally implements after taking all the vested interests into consideration ignoring the Honorable Supreme court Order 🙂