Vodafone appeals to Chidambaram for the revival of telecom industry

With the Empowered Group of Ministers (E-GOM) meeting shortly to decide on various aspects related to the revival of the Indian telecom sector, particularly the TRAI recommendations on the valuation and reserve price of spectrum, Vodafone India has appealed to P Chidambaram, Finance Minister, Government of India, and senior ministers in the EGOM  to take a decision that revives the fortunes of the telecom industry and benefits consumers as well as the nation, thereby acting as a national growth engine.

Vodafone has pointed out that if Spectrum Usage Charges (SUC) were maintained at the existing differential and discriminatory levels instead of a uniform SUC as recommended by TRAI, it would once again stifle participation in auctions.

TRAI has rightly highlighted that the existing SUC regime has spawned several anomalies and contains numerous inherent deficiencies. For example, it acts as a disincentive for any merger or acquisition, spectrum sharing and trading as well as in acquiring any additional spectrum. It also creates unwanted opportunities for arbitrage between bands and technologies likely to operate under a common unified licence, etc.

Vodafone has asserted that correcting the existing SUC regime is imperative for any effective spectrum reforms to be implemented. Failing this, all spectrum policy reforms being considered by the Government – such as M&A norms, spectrum sharing, trading, etc. – will simply not succeed.

Accordingly, Vodafone India has urged the E-GOM to accept the TRAI recommendation for a uniform SUC regime and for setting the SUC at 3% AGR for the forthcoming auctions.

Vodafone also fully supports and endorses the TRAI recommendation that the Government take an in-principle decision to allow spectrum trading and announce this prior to commencement of the forthcoming auctions, preferably as part of the auction Notice Inviting Applications.

The Company has also submitted that the existing 900 MHz being used by operators should not be auctioned. Instead, a reasonable price for its extension should be set after mutual discussions. Besides being in accordance with contractual provisions and obligations, it will be in consumer interest too. Towards this end, Vodafone had made an offer of Rs4,000 crores to DoT at 3% SUC for extension of its existing licences for Delhi, Mumbai and Kolkata service areas for 20 years.

Furthermore, Vodafone submitted that the reserve price of 1800 MHz spectrum (to be auctioned as per the Supreme Court order) as recommended by TRAI was still on the higher side. Further increase in the reserve price of spectrum for Metro and Category A service areas by the Telecom Commission will adversely affect participation in the forthcoming auctions, and could again result in an unsold spectrum scenario, as was the case in November 2012 and March 2013.


Lastly, Vodafone has pointed out that internationally, enlightened regulators set reserve prices at levels that are sufficient simply to deter non-serious bidders, thereby allowing the market to discover the true price of spectrum.

Vodafone India believes the Honourable E-GOM has a golden opportunity to revive the fortunes of the Indian telecom sector and restore it to its former glory of being the flag bearer of the Indian reforms process – an opportunity the Government can realise by earnestly considering the requests submitted above.