2G Spectrum Drama Continues

[sob]

2G spectrum auction: TRAI sets steep minimum price - Business News - IBNLive

Telecom regulator TRAI on Monday proposed a steep minimum price for auction of 2G telecom spectrum, setting off fears of a hike in mobile phone tariffs which are at present among the cheapest in the world.
The regulator, whose recommendations are not binding on the government, valued 2G spectrum at about Rs 7 lakh crore, nearly seven times more than Rs 1.04 lakh crore that the government had received through auction of 3G spectrum in 2010.
The Telecom Regulatory Authority of India (TRAI) proposed a minimum or base price of Rs 3,622.18 crore for every mega Hertz of spectrum in the 1800 MHz band, where radio airwaves have been freed after the Supreme Court cancelled all mobile permits issued by the then telecom minister A Raja in 2008. The price set is around 10 times more than what companies such as Unitech Wireless, Swan Telecom and Shyam Telecom paid for at least 4.4 MHz of all-India spectrum in 2008.

The reserve price is several times the base price of Rs 3,500 crore for 3G spectrum auction. TRAI recommended that auction should be open to all companies except those having a more than prescribed limit of spectrum, potentially disqualifying incumbents like Airtel, Vodafone and BSNL.

Looks like Telecom Operators might go to court over these new recommendations.

 

[sob]

If we are to go in by these figures of TRAI then the 2 G scam should be Rs. 7 Lakh Crores, much higher than the Rs. 1.6 Lakhs as mentioned by CAG in it's report. Now Mr.Sibal has to explain how did he come out with the Zero loss figures of the 2 G scam.

 

[Mad Indian]

If we are to go in by these figures of TRAI then the 2 G scam should be Rs. 7 Lakh Crores, much higher than the Rs. 1.6 Lakhs as mentioned by CAG in it's report. Now Mr.Sibal has to explain how did he come out with the Zero loss figures of the 2 G scam.

He already has explained. Its zero loss because it was done under UPA

-True story

 

[sob]

TRAI auction proposals: Why telcos, consumers are upset | Firstpost

Looks like everyone from companies to consumers have reason to be disgruntled about the Telecom Regulatory Authority of India's (TRAI) recommendations on the highly-anticipated auction for 2G spectrum after the Supreme Court ordered the cancellation of all telecom permits awarded in a scandal-tainted 2008 sale and the redistribution of those permits through an open bidding process.

Here are the key reasons for the discontent:

1. Much higher-than-expected reserve price

2.This year's auction may not allow every telco to get a licence

3. Vodafone, Bharti and Idea will have to shell out crores for 'refarming'

4.No more one paise per second tariffs for consumers?

Why do we have to muddle up such a crucial economic sector is beyond my comprehension.

 

[nrj]

Sob,
You think that telecom operators are going to stay away from auctions even when base prices are placed way too high?

I doubt if SC will issue stay on spectrum bidding even if COAI drags TRAI to the court.

Hunks in telecom will not find it difficult to raise the required money. Late entrants & small players are going to face problems looking at their inability to increase revenue when it is very unlikely that consumers tariffs will increase. And even if they increase end user prices, they still cant make halfway for the cost of 5MHz.

I believe more rounds of ministry-level meetings will happen before this recommandations draft is approved. And what GOI MUST do is put a word to money lenders & help the companies raise capital for this purchase.

 

[sob]

NRA, the telecom operators have no choice, they will have to pay whatever rates the Govt. decides. The consumer is the one who has to pay for this. Expect increase in call rates. Banks have a problem, their exposure in the telecom sector is very high, and they should not follow Govt. diktats but only see this investment professionally.

The problem is the policy flip flops in this sector. This does not reflect well on the country and it's policies.

 

[thakur_ritesh]

Come on Sumeet, CAG calculated the figure based on what could have been accrued had the auctions happened then and not now, and even then realising 1.6 lack crores would have been a huge challenge even if every rule of the book was followed. The loss is no where near 7 lack crores, not even 1.6 lack crores though closer to that figure.

If the government does realise these 7 lack crores, expect quite a few more social security programs prior to the elections in 2014. Pranab and Congress HC couldn't have been happier.

 

[Yusuf]

This 2G auction is the worst thing that can happen in the telecom sector. We will have a steep rise in tariffs. Goodbye to 1paise per sec

 

[sob]

Ritesh, the arithmetic and the assumptions are very clear. CAG based the figures on the 3 G auction prices and now TRAI has given a value to the 2G spectrum-- which was given for free during Mr.Raja's regime.

In the budget the Hon. F.M. has put a figure of Rs. 40,000 crores from the auction of the 2G spectrum. This is another figure for the value of the spectrum.

So the point is that how do you come to a figure for the 2 G scam. If you go by the basic assumption of CAG i.e to place a value on the 2G spectrum, the new figure now comes to be Rs. 7 Lakh crores ( I have no idea how many zeros would come here).

But the main point is that both ways the Govt. is not doing the correct thing. They are looking at the very short term picture-- revenue from sale of spectrum. For this they have invited more than 10 players to operate in the Telecom sector. They are all chasing a very expensive and scare commodity, so the prices will go up in an auction and the Govt. stands to get a windfall profit. Al the money is going to come from loans from banks.
However a few years down the line, nobody would be making money and the small players would be ready to fold up. A La KFA, the Govt. will again step in to save thousands of jobs ( read companies/promoters) and the public money will go down the drain.

In my view looking at the size of our country 5 Private players + BSNL/MTNL would be more than enough to provide us the healthy telecom infrastructure and the number of players would ensure that there is healthy competition in favour of the consumers.

 

[Iamanidiot]

First and more moast at the prices they want to sell the spectrum there will be no takers for the spectrum.The prices must be fair and reasonable

 

[Yusuf]

Sob, in the days of 5 companies with healthy competition, we paid 6/- a minute. Which then came down to 3,2,1 and now 1 paise per sec because more companies came in.

 

[SLASH]

Nice move by UPA. Now everyone will oppose to 2G auction. TRAI has deliberately put the spectrum price this high.

UPA: We told you so.


Estimates of call rates is at Rs.5/min.

 

[Yusuf]

Nice move by UPA. Now everyone will oppose to 2G auction. TRAI has deliberately put the spectrum price this high.

UPA: We told you so.


Estimates of call rates is at Rs.5/min.

Just a couple of days back, TRAI issued an order asking all telecom companies to offer per second pulse. How will they do that?

 

[Predator]

3. Vodafone, Bharti and Idea will have to shell out crores for 'refarming'

reliance and tata telco win once again by being close to congress

it was ambani of reliance and tata who were caught talking to nira radia and setting up deals, and yet they manage to come scot-free and winners of 2G scam

 

[sob]

Sob, in the days of 5 companies with healthy competition, we paid 6/- a minute. Which then came down to 3,2,1 and now 1 paise per sec because more companies came in.

Yusuf Rs. 6/min was almost 12 years ago, before Reliance had entered the scene. At that time time you were paying for incoming calls also.

OTOH, even you will admit 1p/sec is not realistic, this could not have gone on for ever. I think Airtel and others have raised tarrif by about 10 to 12% for new connections.

 

[sob]

Nice move by UPA. Now everyone will oppose to 2G auction. TRAI has deliberately put the spectrum price this high.

UPA: We told you so.


Estimates of call rates is at Rs.5/min.

The tarrif has been set higher because the Govt. needs this money very badly to lower it's fiscal deficit and also to unleash more populist programmes which are aimed at the next elections.

 

[thakur_ritesh]

Sumeet,

The premise of 7 lack crores is what the amount will be accumulated if the auction happens today, ie in 2012, and not when the 2G auction happened when raja was around, so the loss is definitely not this figure. 7 lack crores is a figure when the number of 2G service user base has increased many folds, there is a market for the same and there will be a steady increase irrespective of 3G or 4G, when the competition has again increased many folds, and this when Indian telecom sector has performed par excellence, the only sector which has done so even when the going has been tough.

Fair enough, the loss could possibly be 1.6 lack crores, though this figure is again based on assumption on what could have been achieved, and generally even if the rules were to be followed in every spirit of the word, realizing even this figure would have been a challenge back then. FM for obvious reasons will take the lowest possible figure that they can logically argue, and one cant fault him for he and the cabinet will try ways of saving their skin. But then again if FM is putting a figure of 40,000crores, it can be safely assumed the figure to be much more than that, and seriously this is not the figure I am trying to bring the focus to, but the figure of 7 lack crores, which as I have highlighted could never have been accumulated back then when the 2G auction happened, so the loss was definitely no where even near that figure.

There is no doubt government has the fiscal situation and social security/loan waivers in mind for 2013-14, and so they will press for this and for the exact reason they are after Vodafone as well, a situation of mess created by this very government and interestingly we will see that the telecom companies will hook on irrespective because you are talking about a market which is soon to touch over a billion mark in a few years and there is still lots and lots of money to be made, yes these companies will crib in the beginning and it is to be expected but they will all join in, all the government needs is just one of them jumping in, rest are bound to follow.

Of course in all this the consumer is bound to be the fall guy, so it shall be, certain companies might also go down but I remain of the view that the Indian telecom sector will get to witness significant consolidation in times to come and we should let the market dynamics decide on the number of telecom players, not the government. What we also don't need to forget is that these telecom companies have till now made some huge profits, so if they are going to make a little less, it should be just fine. About a lot of articles which are doing rounds on how unrealistic these quoted figures are, for all we know, these reports could all well be one of those "paid" news campaign run by these telecom companies, just the way how quickly the news on ill effects of radiations caused by these mobile connections gets shot down from the main stream media.

 

[nrj]

First and more moast at the prices they want to sell the spectrum there will be no takers for the spectrum.The prices must be fair and reasonable

Hollow talk!

Every serious business house will be rushing themselves on the day of auction.

Also for now they are supposed to pay only 33% of the entire price up front.