Tower firms have joined ranks with telecom companies in rejecting the TRAI proposals on 2G auction.
The tower companies, which were depending on roll outs by the new players, have been hit hard by the move to cancel 122 licences. They were betting on some of the new players to take back the spectrum through auction, which looks remote if TRAI recommendations are accepted.
“TRAI proposal to auction only one slot of 5 Mhz spectrum will reduce competition. Such a move will not only impact the mobile segment, but also have a detrimental impact on the entire ecosystem, including tower firms.” Mr Umang Das, Director General of Tower and Infrastructure Providers Association (TAIPA), told
Most of the tower companies, including Viom and American Tower Corporation, had made their future business projections hoping to get business from new 2G players. For instance, Viom manages most of the network requirement for Telenor controlled Uninor. If Telenor is unable to win back spectrum, it will dent Viom's revenues.
Telenor has already said that it will exit the country if TRAI recommendations are implemented. “Already, most of the new 2G players have withdrawn from the market which is forcing us to raise rentals. If more operators exit then tower companies will struggle,” said Mr Das.
Licence fee
In addition to the fallout of the 2G auction, the tower companies are also worried about the TRAI proposal to impose licence fee on infrastructure companies.
TRAI has said that tower companies should be brought under unified licensing regime and asked to pay revenue share to the Government.
“The proposal to bring infrastructure companies under the unified licence regime beats all logic. This will fold up the tower industry,” said Mr Das.
CEOs contest TRAI claims
The entire industry has condemned the telecom regulator's proposals. On Thursday, the GSM players came together to reiterate their concerns. “If the TRAI proposals are accepted then it could raise tariffs by 100 per cent. Re-farming will push tariffs even further,” said Mr Sanjay Kapoor, CEO, Bharti Airtel.
The telecom regulator had proposed Rs 18,000 crore as the base price for 1800 Mhz spectrum band. In addition, it has suggested moving the existing operators on 900 Mhz to 1800 Mhz band for re-farming. “This is not re-farming, this is eviction. This will result in huge write-offs in tens of thousands of crore,” said Mr Himanshu Kapania, CEO, Idea Cellular.
The operators said that they are contesting TRAI's claims that the tariffs will increase only by 2-3 paise if the proposals are implemented.
“We can't understand how TRAI has arrived at this conclusion. As operators which run the telephony business we know that this is completely wrong,” said Mr Martin Peiters, CEO, Vodafone India.