Spectrum pricing to hurt investment: Sistema president

On Wednesday, Sistema Shyam had suggested that reserve price for 800Mhz band be at par with market discovered price of 1800MHz band

While the Government has been trying to make more spectrum available for the telecom operators, the latest pricing would hurt the telecom operators and could hamper further investment in the sector, Mikhail Shamolin, president & CEO, Sistema, said on Thursday.

"For us it is very important to understand how the telecom policy will be changing and evolving in the future, what is going to happen with the spectrum availability. The kind of prices on the CDMA spectrum that we saw announced recently are exceptionally high and almost prohibitively high for making return on telecom investment and we will be in a deep discussions," Shamolin said, reported a television channel. He was speaking on the sidelines of MTS iNNOVATSii - an initiative by Sistema Shyam Teleservices in India to look for telecom ideas that can be applied in commercial, social or government spheres with a high level objective to improve the overall quality of life.

On Wednesday, Sistema Shyam Teleservices, the lone operator that uses CDMA technology in India, had asked the Government to rethink on the base price for 800MHz band spectrum, and has suggested that the reserve price should be at par with the market discovered price of 1800MHz band.

In a statement, Sistema Shyam Teleservices said, at such a price one would not find any takers for 800MHz spectrum in the 2015 auctions, given that this price has also been previously tested in the market, way back in November 2012. "We would urge the Government to rethink on the spectrum price for 800MHz band and bring it at par with the market discovered price of 1800MHz," it added.

Inter-ministerial panel Telecom Commission has in a meeting earlier this week recommended the base price of 800MHz band airwave at Rs 3,646 crore per MHz (pan-Indian), about 17 per cent more than what the Telecom Regulatory of Authority of India (Trai) had recommended last month. Meanwhile, Trai suggested reserve price was about 15 per cent higher than what it had recommended in February. Last month, the regulator had recommended the reserve price to be Rs 3,104 crore, which is 72 per cent higher than the Rs 1,800 crore rate in 2013 auction.

The Telecom Commission has suggested the base price of 1800MHz band radiowave should be Rs 2,191 crore per MHz across 20 telecom zones.

"It is not in sync with the business and ecosystem realities. The proposed pricing of Rs 3,646 crore per MHz is way out of line and does not merit a strong business case for buying spectrum in the said band," Sistema Shyam Teleservices, which operates under MTS brand in India, said in a statement.