June 01, 2023

Old Thinking On Telecom Sector Must Go

By A Special Correspondent
First publised on 2021-01-11 08:08:29

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Given the state of the finances of the telecom companies in India, the high reserve price of spectrum that the government has kept for the ensuing round of auction across seven bands will mean that there will be lesser interest and even if the telcos have no other option but to acquire the spectrum by arranging the funds, they will be further stressed.

Hence, many experts are of the opinion that the government is not right in going for a direct and backbreaking (for the telcos) auction. They suggest that out-of-the-box thinking should have been employed to ensure that the government got the funds but the telcos were not unduly stressed. This is even more important as the 5G spectrum will also be up for grabs in the very near future.

The Economic Times has suggested in an editorial that a few spectrum exchanges could have been constituted and they could have bought the spectrum, while the telcos could have later acquired the same based on need. Although the exchanges would have given them the needed spectrum at a higher price, the telcos would not have had to cough up huge amounts upfront.

This is an eminently sane suggestion and the government must think along these lines. With the Supreme Court order for paying back dues on AGR and with the market not likely to respond favourably to a steep increase in tariffs, the telecom sector is in for a prolonged period of financial stress. Asking it to hoard spectrum at unrealistic prices at this juncture is not right.

The government needs to study the entire scenario of the telecom sector afresh. From licensing to AGR and from spectrum sales to setting the tariff everything needs to be worked out differently in a manner that all stakeholders, including the government, the telcos and the end users, are not impacted adversely. The telecom sector plays a vital role in the development of the nation as communication is a tool needed by all. Hence, it cannot be allowed to remain technologically backward, disintegrate or die a slow death due to high spectrum costs and adverse revenue sharing models.

picture courtesy: the indianwire.com