Telecom consolidation not a worry for users, fair competition still aplenty, says former DoT secy

By: |
Published: January 10, 2018 11:18:41 AM

While the number of players in the Telecom sector has dwindled, R Chandrasekhar, the former secretary of Department of Telecom, says that there’s no concern as yet, and fair competition exists in the industry.

telecom sector revenue, drop in telecom sector revenue, government's revenue from telecom sectorR Chandrashekhar, the former secretary of Department of Telecommunications says there’s fair competition in the industry. (Image: Reuters)

After the Telecom Commision approved  TRAI’s recommendation on relaxing spectrum-holding caps to 35% from 25%, a move seen to pave the way for further consolidation in the industry, R Chandrashekhar, the former secretary of Department of Telecommunications said there’s fair competition in the industry. The decision will provide a major relief for the soon-to-be-merged Idea Cellular and Vodafone, as they would have breached the spectrum cap in certain locations under the existing rules. The decision would also enable aggressive newcomer Reliance Jio to pick up additional spectrum, if needed, in bands like 800 MHz.

Interestingly, the number of players in the telecom industry has fallen from seven to four currently. With a lot happening on the consolidation front in the telecom space with high profile business combinations of Bharti Airtel and Telenor India and the ongoing Idea-Vodafone merger, Sunil Bharti Mittal,the Founder & Chairman of Bharti Enterprises says that the Indian telecom space at 3 plus one–three major telecom behemoths and the state-run BSNL in the sector going forward offers a lot of growth potential. While the number of players in the sector has dwindled, R Chandrasekhar, the current president of NASSCOM, says that there’s no concern as yet, and fair competition exists in the industry.

“The three private sector players and one public sector player, is a fair degree of competition from a global norm perspective. There are many countries with two or three players only.  Having four players is therefore a fair degree of competition. Even if you take into account the much higher population in India, which if offset by a much lower tariff structure. Right now I will not be concerned about the degree of competition. However, further consolidation in the industry may lead to questions,” R Chandrasekhar told ET Now.

In its September meeting, the Telecom Commission had in- principle approved the extension of time period for the payment of spectrum bought in auctions by telcos to 16 years from the current 10 years, as recommended by the IMG. It had also approved the IMG recommendation to lower the interest rate charged over penalties imposed on service providers with slight modifications.

The commission had sought a legal opinion on some of the points it approved at its previous meeting in September-end before firming up its view. Trai last month recommended that the ceiling on spectrum held by mobile operators within a particular band should be removed, while suggesting a 50 per cent cap on combined radiowave holding in efficient bands like 700 MHz, 800 MHz and 900 MHz.

Trai has also suggested that the overall cap on holding spectrum should be raised from the current 25 per cent to 35 per cent. Besides this, TC is likely to consider raising of FDI limit up to 100 per cent for all telecom services including infrastructure through automatic route.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.