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Dialling trouble PDF Print E-mail
Friday, 07 February 2014 01:41
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Indian Express edit 

Telecom auction bids have sky-rocketed because of policy uncertainty. That’s reason to worry.

With the first three days of the telecom auctions already fetching Rs 50,000 crore, as compared with Rs 67,000 crore for 3G auctions in 2010, it is obvious that industry has a problem. More so since it is clear not too much money has been made in the last four years in the 3G space or for broadband wireless access (BWA) airwaves for which another Rs 39,000 crore was paid.How serious the problem can be is best illustrated by the case of Mumbai where, if you assume the auctions were to end at today’s prices, the industry will have spent around $5 billion in buying spectrum since 2010 while its topline revenues are just around $1billion — once you factor in profits, the equation gets even more unfavourable. What makes the situation inexplicable is that industry is not in the pink of health, with dropping subscriber growth and a fall in the amount of time subscribers are spending on the network.Indeed, industry is yet to recover from the twin blows of the excessive competition ushered in by then telecom minister A. Raja in 2008 when he handed out licenses at a fraction of their value and 2010’s irrational bidding.

Since the government has still not come out with a definite, and believable, plan of making spectrum available in the future, industry is just grabbing whatever it can afford to buy. Who would have thought, for instance, that the 900MHz spectrum license that telcos had would not be renewed? After all, when mines given to steel producers come up for renewal, they have always got renewed in the past. It is this that is responsible for the current frenzy. Indeed, given that many more 900MHz licenses are likely to come up for renewal over the next few years, industry could be in for a rough ride.

If the government is interested in the future of the industry, as indeed it should be, it needs to quickly put in place a spectrum availability map for the future. And along with the availability of fresh spectrum, rules need to be clear on, for instance, transfer of spectrum, spectrum-trading and so on. If telcos knew, for instance, that spectrum lying idle with MTNL and BSNL would be available for lease, they would not have bid as irrationally as they have.The current policy of uncertainty has got the government more money but it is akin to killing the goose that lays the golden egg

 

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