  Idea cellular on Monday said that TRAI’s recommendations on 2G spectrum auction are not in line with the Supreme Court’s February 2 verdict which mandated some basic legal features for the re-auction of licences.
The company which is set to lose 13 spectrum licences has termed it as “gross violation of the Supreme Court order cancelling 122 telecom licences” granted in 2008.
Himanshu Kapania, Managing Director, Idea Cellular in latter to the telecom minister Kapil Sibal said that the order does not lend itself to mutilation by any reduction from 122, in the number of licences to be auctioned. Equally, the order does not lend itself to diversion of the spectrum attached to the quashed 122 licences to any one, other than the new licence auction winners.
He said that the reserve price should be the one paid in 2008, Rs 1,658 crore along with notional interest for the intervening period. “Anything lower would confer a potential benefit to the winner not intended by the order. Equally, anything higher would inflict a potential penalty not intended by the order, quite apart from vitiating true price discovery,”
Trai had recommended a reserve price of Rs 3,622 crore. “What have been quashed are licences (with subsequent allocation of spectrum). What are directed to be granted by auction are licences (with spectrum). Any changes to these basic features of the auction would not merely trespass rights and obligations, they would subvert and violate the Supreme Court order,” he said.
Of the 13 licenses that Idea lost, seven (including Tamil Nadu, West Bengal, Assam, Odisha, J&K) were operational. And while the licenses will remain operational till the spectrum auction, the deadline for which has been extended. Many operators including Idea feel that TRAI recommendations will adversely impact the existing operators.
"According to industry estimates, you will have to write off assets of Rs 25,000 crore and make fresh investment of Rs 1.25 lakh crore if the spectrum re-farming proposal goes in the present form,"says Himanshu Kapania, CEO of Idea Cellular.
Kapanis said that there are 900 million customers in the country, of which 500 million customers currently are on 900 Mhz. The minute one were to change spectrum size from 900 Mhz to 1800 Mhz, lot of coverage will get disturbed.
“Around 100 thousand villages immediately will have no coverage. Existing customers in Delhi, Mumbai who are on 900 Mhz will have quality issues. Call drops will increase, indoor coverage may not be available, so people who enjoy coverage in offices, in their homes will not get the coverage," says Kapania.
He said for idea, 50% of its 11 million subscribers are currently on the 900 Mhz frequency. Same is the case for Bharti and Vodafone.
And if the TRAI proposals are accepted, call charges could rise by as high as 50-100%, he says.
"Till now run, the spectrum cost was not a significant cost in an overall factor, but if spectrum becomes extremely expensive then spectrum and financing of spectrum will become a significant cost in the overall factor. Our calculation shows that tariffs would have to be hiked between 50-100% to compens |