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Communications minister Kapil Sibal on Wednesday rejected the demand of some aggrieved telecom operators for a refund of the extra money they had forked out for buying 2G spectrum during an auction last November, in the light of the recommendation of the regulator to sharply reduce the base auction price by 37 per cent.
Instead, Sibal said these telcos were not forced to go to the auctions in November and bought spectrum of their own free will. He was replying to a query by Videocon Telecommunications Chief Executive Officer (CEO) Arvind Bali and made it clear no such demand would be entertained by his department. Sibal said this in an open house he had called on Wednesday with top executives of telecom companies.
Those who attended the session included Gopal Vittal, CEO of Bharti Airtel; Gurdeep Singh, president of Reliance Communications; T V Ramachandran, who heads regulatory functions in Vodafone; Srinath Narasimhan, managing director of Tata Telservices; Himanshu Kapania, managing director of Idea Cellular; and representatives from Videocon, Sistema, and Aircel among others.
Most of the new telcos, such as Videocon, Sistema and Telewings, as well as Idea Cellular, had forked out Rs 4,000 crore more in November in comparison to the lower auction base price recommended now by the Telecom Regulatory Authority of India (Trai). However Sibal’s contention that the telcos had a free hand in the November auction has been rubbished by others. Says a top executive of a telecom company: “Of course, we were forced. Sibal has forgotten that had we not bid for the auction, we would have lost the Rs 1,650 crore that we had paid for a pan-India licence, which the Supreme Court cancelled (this was adjusted with the auction spectrum payment). All our investments would have gone down under. And we would have lost all our subscribers. So what choice did we have?”
Sibal, however, laid a road map for telecom companies on some key contentious issues, including the imposition of a minimum penalty of Rs 50 crore a circle for any alleged violation of licence terms. Telcos have been imposed fines worth thousands of crore. Sibal has given 60 days to resolve this issue.
“I hope officials in my ministry would apply their mind openly on every infraction and impose penalty commensurate with the nature of the fault,” Sibal said. “If they don’t do that — and I don't see any progress on that — I would have to give that power to Trai so that it is taken from them.”
Responding to the concerns of CDMA operators that the regulator had virtually closed their path of growth by not auctioning any more 800 Mhz spectrum, Sibal said their concerns were “valid” and assured them that Trai’s recommendations were not final.
Sibal also agreed to set up a round table with telecom companies soon to discuss impediments in their migration to a unified licence. Many companies such as Vodafone have complained that the rule disallowing crossholdings completely (earlier you could have up to 10 per cent equity in a competing telco in the same circle) has been unfair on them, as they also have a stake in Bharti Airtel, which they would be forced to sell in a depressed market.
He said the new merger and acquisition guidelines would be ready soon. Sibal said the executives were also receptive to a move to make audits of roll-out obligations simpler. He was positive in allowing active infrastructure-sharing between operators. And, he also agreed to consider a proposal for allowing digital-signature verification for customer application forms. He said he would not allow bank guarantees to be encashed by the department in cases where minor variations from the rules had been found in filling the forms.
Sibal added with the government’s measures including allowing 100 per cent foreign direct investment in telecom and moving to a new licence regime had been welcomed by the markets, with telco stocks rising. He, however, said he expected the sector to unanimously welcome the Trai moves.
Instead some of them had been asking for a further reduction of the base auction price. He also pleaded that the sector should work together and iron out the differences among themselves.
Instead, Sibal said these telcos were not forced to go to the auctions in November and bought spectrum of their own free will. He was replying to a query by Videocon Telecommunications Chief Executive Officer (CEO) Arvind Bali and made it clear no such demand would be entertained by his department. Sibal said this in an open house he had called on Wednesday with top executives of telecom companies.
Those who attended the session included Gopal Vittal, CEO of Bharti Airtel; Gurdeep Singh, president of Reliance Communications; T V Ramachandran, who heads regulatory functions in Vodafone; Srinath Narasimhan, managing director of Tata Telservices; Himanshu Kapania, managing director of Idea Cellular; and representatives from Videocon, Sistema, and Aircel among others.
Most of the new telcos, such as Videocon, Sistema and Telewings, as well as Idea Cellular, had forked out Rs 4,000 crore more in November in comparison to the lower auction base price recommended now by the Telecom Regulatory Authority of India (Trai). However Sibal’s contention that the telcos had a free hand in the November auction has been rubbished by others. Says a top executive of a telecom company: “Of course, we were forced. Sibal has forgotten that had we not bid for the auction, we would have lost the Rs 1,650 crore that we had paid for a pan-India licence, which the Supreme Court cancelled (this was adjusted with the auction spectrum payment). All our investments would have gone down under. And we would have lost all our subscribers. So what choice did we have?”
Sibal, however, laid a road map for telecom companies on some key contentious issues, including the imposition of a minimum penalty of Rs 50 crore a circle for any alleged violation of licence terms. Telcos have been imposed fines worth thousands of crore. Sibal has given 60 days to resolve this issue.
“I hope officials in my ministry would apply their mind openly on every infraction and impose penalty commensurate with the nature of the fault,” Sibal said. “If they don’t do that — and I don't see any progress on that — I would have to give that power to Trai so that it is taken from them.”
Responding to the concerns of CDMA operators that the regulator had virtually closed their path of growth by not auctioning any more 800 Mhz spectrum, Sibal said their concerns were “valid” and assured them that Trai’s recommendations were not final.
Sibal also agreed to set up a round table with telecom companies soon to discuss impediments in their migration to a unified licence. Many companies such as Vodafone have complained that the rule disallowing crossholdings completely (earlier you could have up to 10 per cent equity in a competing telco in the same circle) has been unfair on them, as they also have a stake in Bharti Airtel, which they would be forced to sell in a depressed market.
He said the new merger and acquisition guidelines would be ready soon. Sibal said the executives were also receptive to a move to make audits of roll-out obligations simpler. He was positive in allowing active infrastructure-sharing between operators. And, he also agreed to consider a proposal for allowing digital-signature verification for customer application forms. He said he would not allow bank guarantees to be encashed by the department in cases where minor variations from the rules had been found in filling the forms.
Sibal added with the government’s measures including allowing 100 per cent foreign direct investment in telecom and moving to a new licence regime had been welcomed by the markets, with telco stocks rising. He, however, said he expected the sector to unanimously welcome the Trai moves.
Instead some of them had been asking for a further reduction of the base auction price. He also pleaded that the sector should work together and iron out the differences among themselves.
