Reserve price will impact sector, aam admi: COAI & AUSPI

In a panel discussion on CNBC-TV18, Rajan S Mathew, director-general, COAI (Cellular Operators Association of India) and SC Khanna, secretary-general, AUSPI (Association of Unified Telecom Service Providers of India) discuss the implications of meeting of the Empowered Group of Ministers on Tuesday.

Rajan S Mathew, Director-general, COAI

Below is an edited transcript of the discussion on CNBC-TV18. Also watch the accompanying video.

Q: The crucial decision on the reserve price that was eagerly looked forward was unanswered. Will the telecom sector have to live with the reserve price decided by JS Sarma?

Mathew: I think the COAI is optimistic although things have not panned out as expected. We have submitted substantial documentation and data to the TRAI, the government and the EGoM explaining why the recommended high reserve price will be disastrous for the consumer as well as for the industry.

We hope that independent data and studies by Price Waterhouse, E&Y and several other analysts will convince the EGoM that the reserve price needs to be set much lower.

Q: In the current political environment, won’t it be political suicide if the government actually reduces reserve price?

Mathew: I think it is appropriate to note that the matter at hand is the reserve price. In our opinion, the auctions should determine the final price as it was done in the case of the 3G auctions.

Reserve prices are never set at the near realisation rate. So all we are  asking the EGoM to do is to reduce the reserve price to reasonable levels and let the auction determine the final price so there is no loss of revenue to the government in that scenario.

Q: The COAI and AUSPI have been parlaying with the government to see the industry’s point of view as far as tariff escalation is concerned. So far you haven’t met with much luck. TRAI under JS Sarma prepared a 34-page report analysing the impact of tariff. Do you hope to see something different under Rahul Khullar?

Khanna: It’s a very easy job. I don’t know why government of India, all the groups of ministers and the bureaucrats who are members of the Telecom Commission have not been able to take a simple decision. The reserve price of Rs 18,000 – Rs 19,000 crore for 5MHz of spectrum the tariffs will go up and adversely impact the common man.

Q: So you believe that if the government goes ahead with the reserve price as was publically presented earlier, there is going to be a tariff escalation of between 50-100%?

Khanna: Tariffs will go up. Secondly, the common man, who is now using the phone at 40 or 50 paisa, will have to pay an unaffordable price of Rs 1.50. This would impact the telecom sector as the mobile phone is used more than the pen or pencil.

(curtsey : money control)

Rupesh Yatesh Dalal
Head Research Department


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