Vodafone terms Trai report "perverse", asks govt to reject it

Terming the Trai recommendations on spectrum "retrograde and perverse", Vodafone today asked the government to reject the report as its acceptance would sound the death knell for the telecom sector.

In a letter written to Telecom Minister A Raja days after the sectoral regulator submitted the report to the Telecom Department, Vodafone said, "...The entire industry is devastated by the illogical, retrograde and perverse recommendations."

Vodafone has requested the minister to intervene and ensure that the proposals are rejected by the government.

All Trai proposals need to be approved by the Department of Telecom (DoT) to be made a law.

The letter comes at a time when all the major GSM operators, including Bharti Airtel, have strongly opposed Trai's recommendation to charge incumbent telecom operators a one-time fee for holding 2G spectrum beyond 6.2 MHz.

For radiowaves beyond the contracted 6.2 MHz in their possession, the Trai on May 11, recommended that operators pay a one-time fee based on prices of 3G spectrum, the auction for which is currently on.

Bharti, Vodafone Essar, MTNL and BSNL hold over 6.2 MHz of spectrum in many of the circles. Bharti and Vodafone hold more than 10 MHz in many circles, including Mumbai and New Delhi.

As per Trai proposals, for spectrum between 6.2 MHz and 8 MHz, operators have to pay a one-time fee discovered by the 3G auction. For spectrum between 8 MHz and 10 MHz, the fee will be 1.3 times the 3G price.

The letter further said that the recommendations have caused much negative sentiment in the market and have already led to a loss of confidence amongst the investing community.

Telecom stocks were battered on the bourses following the Trai proposals in anticipation of operators' balance sheets being hit by huge payout.

"If accepted, will lead to many investors rethinking their business plans and prospective investments in Indian telecom. This would undermine the goal of extending LCM and mobile broadband services to the poorest across the country," the Vodafone letter said.