700 MHz spectrum priced ‘too high’, says Airtel CEO

The country’s largest telecom operator, Bharti Airtel, on Friday termed the TRAI-recommended reserve price for 700 MHz as “too high”, adding that company may not bid for the band in the upcoming auction.

“The reserve price for 700 MHz is too expensive. We cannot afford to buy at that price,” Gopal Vittal, Managing Director and Chief Executive Officer, India and South Asia, told analysts on an investors call.

The Telecom Regulatory Authority of India (TRAI) on Wednesday recommended a spectrum reserve price for the upcoming auctions, keeping it at ₹11,485 crore per megahertz for the 700 MHz band, which is considered the most lucrative.

Vittal said though 700 MHz is a ‘valuable spectrum’ because of its propagation value, the ecosystem for that band is still ‘nascent’.

However, he welcomed TRAI’s proposal to put the entire spectrum in the 2100 MHz band for auction.

“We are pleased to see the regulator’s proposal on putting three-four blocks of 2100 MHz spectrum. It’s the right move. It will decongest networks as well as improve voice quality and address call drop problem,” he said.

Vittal said the auction of 2300 MHz and 2500 MHz spectrum was also a good step. “This is a good capacity spectrum and we have some experience in managing this spectrum...we do have gaps in eight circles, which we will be keen to fill at some point in time,” he said.

The 700 MHz band will be auctioned for the first time in the upcoming auctions, expected in May-June. The TRAI has also issued recommendations on valuation and reserve price of spectrum in all other bands, including 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz.

If all spectrum bands are sold, they could net the Centre over ₹5-lakh crore. However, the recommendations first need to be considered by the Telecom Commission and will then be placed before the Cabinet for a final call.

Will hit telcos: Fitch Incidentally, credit rating firm Fitch has also said the high base price recommended by TRAI for the 700 MHz spectrum would impact telecom operators’ balance sheets and the top companies may not bid for it.

“The top four telcos — Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications — may hesitate to bid for 700 MHz spectrum, given their stretched balance sheets and need to preserve cash in light of impending competition from the entry of Reliance Jio in March-April,” it said.

Airtel’s shares ended lower by ₹1.60 at ₹289.70 on the Bombay Stock Exchange on Friday.

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