Spectrum auction base price too high in India: Vodafone CEO
Vodafone CEO said that the government needs to take clear and simpler views about the benefits that will come from lower value of spectrum.
Barcelona: Vodafone, which has not applied for taking part in spectrum auction in March, on Tuesday said the reserve price set is too high and the company cannot afford to pay in India where there is uncertainty about airwaves and revenues are low. "The problem is that in India there is a misperception of what is the value of spectrum. The reserve prices are set too high. India has very low prices and very low revenues so we cannot afford to pay high price for spectrum," Vodafone Group's Chief Executive Officer Vittorio Colao said.
The Department of Telecommunications has announced plans to conduct auction for spectrum that remained unsold in November along with the airwaves that are held by operators whose licences are due for renewal in 2014. Vodafone holds 900 Mhz band spectrum in Delhi, Mumbai and Kolkata under permits that are to be renewed in 2014. Russia's Sistema which operates on CDMA platform is the lone applicant for sale of airwaves in the March auction. Government has fixed price of 900 Mhz two times high of 1800 Mhz.
"We have told them (Indian government) a number of times that the order of magnitude that they have in mind just does not make sense," he said. When asked about the company's earlier plans to list its India unit, Colao said: "In a country where you have uncertainty not just about the price of spectrum that you will have, but also the one that you do have already, which you already use for serving the customers, and with a very abnormal
tax dispute which the whole world cannot understand, I think its difficult to list a company."
He said that government needs to take clear and simpler views about the benefits that will come from lower value of spectrum. "I think they have been influenced by auctions that went absolutely wrong, as a consequence of that they have to take clear and simpler view about the benefits that will come from having a lower decent value of the spectrum, rather than setting very high price for spectrum and than nobody bids," Colao said.
In November, 2012 auction, government received bids worth about Rs 9,407 crore for total spectrum amounting to minimum of around Rs 28,000 crore that were put for auction. He said that the company will "engage the (Indian) government to explain again why we think that they should review downwards significantly the perception of value of spectrum." Vodafone India, along with Bharti Airtel and Loop, had approached the Delhi High Court against DoT decision to put up for auction the more efficient 900 Mhz spectrum.