Samajwadi Party chief Mulayam Singh Yadav has written yet another letter to the Prime Minister?s Office (PMO), urging the government not to lower the reserve price as recommended by the Telecom Regulatory Authority of India (Trai) for the upcoming 2G auctions. This is the second letter in less than a month from Yadav on a contentious issue that has divided telecom operators. The first was written to then finance minister Pranab Mukherjee asking the government not to charge incumbent operators an auction-discovered price for the balance period of validity of their licences.
Interestingly, the telecom regulator has found support from unexpected quarters at a time when it has been heavily criticised by operators for proposing a reserve price of R3,622 crore for every MHz of spectrum that the government auctions.
Defending the regulator, Yadav wrote: ?Trai, on a number of occasions, has stressed that the above recommended reserve price will not impact the telecom sector adversely.
The tariff increase on account of this will not be more than 5 paise per minute whereas the government will gain R7,00,000 crore in the next few years on account of spectrum charges at the time of renewal of licenses and refarming?.
This view contrasts that of operators who have fiercely opposed the proposal. Operators have cited various studies to contest the regulator?s claims of minimal impact. In fact, a study released by the GSM industry body COAI and PwC has spoken of a price hike between 24 and 90 paise depending on the category of circle, translating into a 100% increase in certain cases.
Yadav?s letters come at a time when the government is unable to decide on the contentious issues of reserve price, whether to charge incumbent operators for every MHz spectrum they hold for the remaining period of their licence and spectrum refarming.
If the government were to go ahead with prospective pricing ? which Yadav opposed in his first letter ? the dual tech operators will be the worst hit since they are left with a licence tenure of at least 10 years for CDMA and another 16 years for GSM.
However, if the government were to accept the telecom regulator?s recommended reserve price of R3,622 crore ? which Yadav?s second letter supports ? GSM operators such as Idea Cellular, Bharti Airtel and Vodafone would suffer a blow owing to mounting financial burden on the trio whose licences are coming up for renewal in less than two years.
Meanwhile, in the letter, a copy of which is with FE, Yadav comes down heavily on telcos for opposing the reserve price: ?The calculations of the Trai and the recommendation of DoT?s internal committee show that neither would there be any adverse impact on telecom operators on account of this fee nor there would be any significant increase in tariff. Therefore, the contention of telecom operators for reduction of the reserve price is nothing but a ploy to not pay revenue to the government?.