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Reserve Price Of INR 14000 Crore Does Not Present A Viable Business Case
 
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Reserve Price Of INR 14000 Crore Does Not Present A Viable Business Case  
 
   
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Friday, August 03, 2012 The Cellular Operators Association of India (COAI) expressed its disappointment at the spectrum pricing decision stating that it affords no real relief to the problem of tariff and affordability, industry health or national development. COAI further stated that the Cabinet decision on the Reserve Price for auction of 1800 MHz spectrum being set at INR 14000 Crore for 5 MHz, does not present a viable business case for the industry and will gravely impact its sustainability and future expansion plans.






The reserve price of INR 14000 crore is unreasonable and still very high and will adversely impact the business viability of the operators and pose a formidable impediment towards raising funds from banks for expansion of services, adding to the already existing funding woes of the sector. Moreover, it will lead to increased tariffs, thereby hurting the Government’s ambitious targets of affordability rural penetration.

As far as the Spectrum Usage Charge (SUC) is concerned; COAI has already stated that the GSM Industry is a victim of a discriminatory spectrum usage regime based on the slab based charge system. The Cabinet’s decision of continuing the slab-wise system for spectrum usage is unfair and will lead to continuation of the non-level playing field within the industry. COAI would again like to highlight that the dual spectrum operators are paying separate spectrum charges for 800 MHz and 1800 MHz despite the TRAI recommendations of 2007; thereby enjoying a lower charge and causing significant losses to the exchequer.

With the sector already under heavy financial burden due to levies to the extent of more than 30% of AGR, the Cabinet’s decision will further hinder the chances of the industry’s development in the future.



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