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Vodafone India on Wednesday said it will be able to pay the one-time fee without much trouble but it is more worried about the payments at the end of its 20-year licence period.
“Paying one-time fee is irritating but it will not break our back. The licence renewal is more important for us,” Marten Pieters, Managing Director and CEO, Vodafone India, told Business Line .
The Government has decided to collect a one-time fee from all telecom companies holding more than 4.4 Mhz spectrum. In addition, it will also collect a fee from operators whose 20-year licences are expiring. Some of Vodafone’s licences run out in 2014.
Lessons from auction
But all of this will be linked to the outcome of the ongoing 2G auction, which has so far been a washout due to the high reserve price fixed by the Government. Pieters said there are learnings in the way the auction has panned out. “I hope the Government sees what happened to the industry in the last three years. There is a need to strike a balance between the interests of the Government, the consumers and the industry. But the interest of the industry is also in the interest of the Government,” he said.
Pieters said the Government should create a level playing field with no arbitrage for any player, including BSNL and MTNL. The Government is looking to give the two PSUs a waiver on one-time fee payments, which Vodafone said was unfair.
He said there should also be a re-think on the spectrum charges collected by the Government. “The business case is dependant on how much spectrum you have. The current usage charge is a huge value destruction. It punishes a guy who has more customers,” he said. Operators have to pay spectrum charges in terms of revenue share, based on the amount of spectrum they hold. The more spectrum they have the higher the charge.
FDI cap
When asked if the proposal to increase FDI cap in telecom sector would bring back investors, Pieters said it may not enhance the interest levels among foreign investors but would end the free ride for Indian minority investors. “If you have 51 per cent stake it gives you control, which is what all investors want. The question is why would you need Indian ownership? It gives a free ride to the Indian investor,” he said. At present, it is mandatory for foreign players to have an Indian partner but a Government committee recently proposed allowing 100 per cent FDI in telecom.
Vodafone India’s revenue has grown 13.3 per cent to Rs 17,580 crore for the six months ended September 30, 2012. The revenues stood at Rs 15,510 crore in the same period last year. The company did not disclose the profit numbers but said its EBITDA has increased 26 per cent to Rs 4,993 crore.
When asked if the company would raise tariffs due to the higher regulatory charges, Pieters said the company would have liked to do so but for fierce competition.
Vodafone India’s capital expenditure was lower at Rs 1,700 crore in the April-September 2012 period compared with Rs 2,430 crore in the same period last year due to market slowdown and uncertain regulatory outlook.
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