Industry body to approach PM against Trai's auction recommendations
US housing data also brightened the market mood, showing a steady recovery in the battered sector, with single-family home prices rising in February for the first time in 10 months and upward revisions to past data.
GSM industry body COAI today said it will approach Prime Minister Manmohan Singh against recommendations made by telecom regulator Trai on spectrum auction.
"We will approach top decision makers in the country – the Prime Minister, Finance Minister, Telecom Minister and EGoM, who will be looking into this issue (spectrum auction). We would like to present our case in all these forums to ensure that these recommendations are not inconsistent with the government's policy," Cellular Operators Association of India (COAI) Director General Rajan S Mathews said.
He said that the association sees inconsistency between government policy of affordability and reserve price recommended by Telecom Regulatory Authority of India (Trai).
Trai yesterday recommended a base price of Rs 3,622 crore for a megahertz of spectrum at pan-India level, which is around 10 times higher than the price for 2G licences in 2008 when A Raja was the Telecom Minister.
COAI and Association of Unified Telecom Service Providers of India (AUSPI), which represent CDMA and Dual licence holders, have termed Trai's recommendations "as being arbitrary, regressive and inconsistent".
Mathews said that by end of this week, COAI will write to the top policy decision makers to highlight issues regarding business funding as well as sustainability.
"Reserve price is the biggest issue we are facing. We are saying that at these reserve prices bringing new people to the bidding process is clearly not a viable proposition," Mathews said.
He added that maintaining affordability on a network after winning spectrum will make the business unviable.
"Maintaining affordability in this case would mean there is going to be downward pressure on prices. Raising tariffs is not a very viable proposition," he said.
Trai Chairman J S Sarma has justified the recommended prices for spectrum saying that the spectrum price has to be paid over period of years and only 33 per cent has to be paid initially.
Mathews said the payment option given by Trai may be helpful but it is not going to work if the project is unsustainable.
"That is what are our concern is. Nobody is going to start project without funding and if the project is going to fail, (then) no bank is going to give us money," he said. Mathews said lenders will look at the total project cost and its viability.
