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He says Trai is being questioned on the methodology deployed to arrive at the spectrum prices and whether the telecom regulator had actually thought of the premium that should go in as a result of the new spectrum being liberalised.
Rajan Mathews, Director General of COAI, on the other hand feels that Trai and Rahul Khullar had done a rather commendable job in terms of clarity and comprehensiveness with which they had addressed all of the various recommendations they had put up. But DoT asking for more clarifications just drags the uncertainty shrouding the sector, he says. It continues to delay the much needed spectrum that is needed to grow this business and the sector, he adds.
Below is the verbatim transcript of Ashok Sud & Rajan Mathews' interview on CNBC-TV18
Ashok Sud
Q: The Trai had suggested a huge significant cut essentially from Rs 14000 crore to Rs 7400 crore and of particular interest to you was also the recommendation that there should be no future CDMA spectrum auctions. How do you take this development and the 9 member panel report?
A: We are very happy with the Department of Telecom (DoT) and we are on the same plank when it comes to the issue of 800 Mhz. As you would agree with me if the Trai recommendation of not having 800 Mhz auctions had been accepted then our members would not have been able to buy anymore 800 Mhz spectrum in the future and therefore their growth would definitely be impacted.
Q: The point really is that Trai believes that spectrum was being over valued especially in the context of what has happened in the last two years, it then said let us reduce the value. Why do you think the government and its officers believe that is not right? Ultimately higher input cost would be passed on to consumers?
A: I really do not know what is in the minds of the telecom commission or the government officers but from whatever one hears from the press they have sought clarifications on the methodology that Trai has followed in order to arrive at these prices and it appears to me that what they are questioning is whether Trai has actually thought of the premium that should go in as a result of the new spectrum being liberalised.
Q: The report had said that as far as the previous round of auction was concerned it disagrees with the belief that what we had seen was a failed auction and said that those prices were not relevant to actual market price because it was only for incremental spectrum, would you agree with that observation?
A: I don't quite agree with that - the fact remains that in 14 circles if I remember one operator has infact gone and purchased more spectrum. Having said that from whatever one learns as far as Auspi is concerned, we had raised three issues with DoT after having read the Trai recommendations, one was that there should be a possibility for 800 Mhz auctions across all the circles. Two, that the Trai or DoT must also show what is the reserve price for 900 Mhz spectrum so that for any auction the members can decide whether they want to bid for 900 or 1800 Mhz. We had also said that we do not agree with the concept of a flat SUC because that would create a whole lot of problems of various kinds and therefore we are very happy to note that on all these three issues, DoT seems to be in agreement with our line of thinking.
Q: Do you think Rahul Khullar will back down because remember his four words again, he was not talking about piecemeal recommendations, he was talking about a completely new paradigm shift as far as valuations and annual charges are concerned. DoT is going into the Nitty-gritty, would Trai back down at this stage?
A: It is very difficult to say how the Trai would think about all this. But having said that, I think one should realise that whereas the Trai thinks on a larger macro plane, DoT has to think on an operational level DoT has to think of what the ground realities are and the nitty-gritty of the issues so therefore they probably come from different perspectives. I think we just have to wait and see whether the Trai backs out on any of these but irrespective of whether it does or not the final call has to be with DoT and that would really be the test till the end on what DoT decides.
Rajan Mathews
Q: What do you make of DoT's move? Are you disappointed that no decision has been taken?
A: Trai and Dr Khullar have done a very commendable job in terms of clarity and the comprehensiveness with which they had addressed all of the various recommendations they had put up. The fact that DoT has now asked for additional clarification I suppose is okay but what this does is continues the period of uncertainty that continues to shroud the industry and continues to delay the much needed spectrum that is needed to grow this business. So, we are bit disappointed that much of the recommendations have not been taken forward.
Q: You told us earlier today that you expect the reserve price to be lower than what the Trai had also proposed, Pricewaterhouse Coopers had come out also with its own suggestions but now it seems the entire thing is swinging the other way completely?
A: We have basically said that we would always have preferred a lower reserve price. Keep in mind that we are talking reserve price and not the ultimate realized price because that will come through the auctions. What we are saying is given the relative priorities between a lower price and the need to get the needed spectrum into the hands of the operators and getting this across the finish line that is imperative between the two is more important and therefore let us go ahead and let the market determine what the final price is. The industry can perhaps live with what some of the prices that are being recommended by Trai. We would have liked a lower one, but lets move forward in the basis of getting the spectrum into the hands of operators.
Q: In terms of timeline for the auction do you think we are on track for an auction to take place in January 2014?
A: Timeframes haven't been discussed. The only original timeframe was January and we think that is still achievable because I believe that Dr Khullar and his team will be able to defend their recommendations quite robustly. So, when you consider that we have already been through three rounds of auctions, that there have already been the NIA documents out there, there should be very little tweaking that will be required in the procedural elements of getting to the auction itself. So, I am still hopeful that we can meet a mid January timeframe.
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