Mr. J. S. Sarma, Chairman of the Telecommunications Regulatory Authority of India [TRAI] addressed Investors across the World just a while ago on the Recommendations of TRAI on Telecom Spectrum Auction in India. Here are the key points on which Dr. Sharma touched upon,

  • As regards the issue of post-January 2008 licencees not getting spectrum owing to the possibility of being outbid by financially stronger operators, Mr Sharma said this is the result of any auction, as the principle of the highest bidder winning applies.
  • On the issue of whether reserve prices for various spectrum bands were too high, Mr Sarma said the auction process would eventually decide this
  • Mr Sarma said the proper price of spectrum must be discovered and all interested stakeholders may not necessarily agree with TRAI’s price.
  • Mr. Sharma was posed with the Question – What if their are No Bidders due to High reserve Prices ?  Mr Sarma said this is hypothetical and the bridge will be crossed once they get to it.
  • TRAI followed a detailed and proper process before it came out with its recommendations, including pre-consultations, consultations and exchange of views with various industry stakeholders.
  • TRAI is not concerned about the level of competition and it is in no way attempting to control the number of operators by assigning “high” reserve prices for spectrum
  • License Renewal – Mr Sarma clarified that operators would have to pay the latest market price for spectrum discovered in the latest auctions. If there is a reasonable gap between the end of the previous auction and the license renewal dates, the price will be suitably adjusted
  • On Finance – Deferred payment schedule will also help banks to lend credit to telecom companies
  • How does TRAI defend itself on the issue of Call Charges going up ? With respect to increase in spectrum costs, Mr Sarma said the cost of spectrum to total cost per mintue ratio is relatively low in India and that TRAI’s recommendations will only raise the average spectrum cost per minute by 1.5 paise on an average
  • Telecom Companies Must Move Towards Data – Mr Sarma said globally, telecom operators focus on data as a revenue driver, and the focus for the industry should be on driving value addition through data services rather than focus on voice tariffs