Global CEOs and promoters of four big telecom companies Sunil Mittal of Bharti Airtel,Kumar Mangalam Birla of Idea Cellular,Jon Fredrik Baksaas of Telenor and Vittorio Collao of Vodafone today knocked on the doors of the government with the emergency warning that Trais recommendations on the auction of 2G spectrum would kill the industry.
In back-to-back meetings with five cabinet ministers and the deputy chairman of the Planning Commission,the CEOs pointed out that the high reserve price set by the telecom regulator,and its recommendations on refarming of spectrum and making only scarce spectrum available for auction this year,would keep operators away from bidding and eventually lead to high prices for consumers.
All five ministers and planning chief Montek Singh Ahluwalia who has the rank of cabinet minister are part of the Empowered Group of Ministers that is authorised to decide on all critical matters related to the auction.
The CEOs first called on Home Minister P Chidambaram around 10.30 am. This was followed by meetings with Corporate Affairs Minister Veerappa Moily,joint secretary in the PMO B V R Subrahmanyam,Agriculture Minister Sharad Pawar,DoT Secretary R Chandrashekar,Commerce Secretary Rahul Khullar,Cabinet Secretary Ajit Seth,Finance Minister Pranab Mukherjee,and Ahluwalia.
Mukherjee heads the EGoM. Commerce Secretary Khullar is tipped to be the next chairman of Trai. The CEOs ended their day with a 40-minute meeting with Telecom Minister Kapil Sibal,which began around 6.30 pm.
Sibal assured Mittal,Birla,Baksaas and Collao that the government would look into their concerns. The telecom operators met me and we had full discussion. They expressed concern regarding Trais recommendations and I said we would certainly look into the matter, Sibal said after the meeting.
The two ministers on the EGoM whom the CEOs quartet could not meet were Law Minister Salman Khurshid and Information & Broadcasting Minister Ambika Soni. The EGoMs mandate includes deciding on the quantum of 2G spectrum to be auctioned,the reserve price,the number of blocks and their size,usage charges and the eligibility criteria for bidders.
The Telecom Commissions final views on the Trai recommendations will be placed before the EGoM,whose decisions need not be cleared by the cabinet.
Mittal,who today announced disappointing fourth quarter results for Bharti Airtel,told reporters that the regulators recommendations would be catastrophic for the telecom sector. This has been the most destructive period of regulatory environment I have seen in 16 years, he said.
After meeting Mukherjee in the second half of the day,Idea chairman Birla said it did not make sense for anyone to participate in the bids at Trai-recommended prices. We talked to the government about the pricing issue… Consumers may have to pay more if spectrum is sold at these rates, he said.
Trais recommendations follow a February 2 Supreme Court judgment cancelling 122 licences issued by former telecom minister A Raja in 2008. Trai has suggested a base price of Rs 3,622 crore for one megahertz (MHz) for pan-India spectrum,which is around 10 times the price at which 2G licenses bundled with 4.4 MHz spectrum were allocated in 2008 under Raja.
Telenor group CEO Baksaas said in a statement,We urge the Indian government to take its rightful political initiative now. This is the time to ensure that the policy made for telecom licence auctions allows affordability,competition and investments… India must remain an attractive destination for all foreign investors across industries,not only because of the growth potential it indeed offers,but also because of its predictable,logical and investor-friendly policy environment.