The Telecom Regulatory Authority of India (Trai) on Wednesday stuck to its earlier proposal of up to a 60 per cent cut in the reserve price for the next round of spectrum auctions in the 1,800 and 900 MHz bands saying the price was arrived at by the use of internationally accepted methodologies.
In its 63-page report to the department of telecommunications (DoT), peppered with quotes from Shakespeare and James Joyce, the regulator has said that in the absence of any alternative approach suggested by the department, there was no scope for it to revise the prices.
Should the government now accept Trai’s pricing formula, the telecom sector will see a sharp reversal in its fortunes. Trai’s recommendation together with the M&A policy being worked on by the government — likely next week — as also the earlier decision to allow 100 per cent FDI in telecom, will make investors more comfortable. A successful auction in January should fetch the government at least Rs 20,000 crore, helping it narrow the fiscal deficit. The draft M&A rules suggest that mergers between even large and mid-sized players will become easier.
Aware that the final decision rests with the government, Trai has advised that the country stands at a crucial stage where the option is either to reform or perish. The mistakes of the past five years, Trai says, have left India 5-10 years behind in the telecom revolution. The authority has counselled the government to seize the opportunity.
This is perhaps the first time in Trai’s history that it has stuck to its recommendations in its entirety when asked by the government for a review.