‘Spectrum prices at high levels, airwaves should be offered as a bundle’, says D-G of Cellular Operators Association of India

The Indian telecom industry’s gone through a significant churn: from a period of more than a dozen different companies competing with each other to a three-player market. While the new telecom reforms announced by the government will help the companies improve their health as well as boost investor confidence in the sector, the government also needs to rethink about the “high pricing of the spectrum”, director general of Cellular Operators Association of India Dr S P Kochhar told Aashish Aryan. Edited excerpts:

What is the industry’s reaction to the recent telecom reforms?

The industry had been bleeding and there were financial problems in varying degrees for all the three players and not just the two. We had been engaged with the government for a very long time that this needed to be looked into fast. Because with 5G approaching fast, the earlier it was resolved, the better it would for the entire ecosystem. In that context, these reforms have come very timely. They have far reaching effects. Yes, they are aimed at improving our liquidity but it also helps us to form business plans. Investments have to be made.

The four-year moratorium is a long period and, obviously, in these four years, if we have sound business plans, revenue should start shoring up. It is not a free lunch so to say. The government has recognised that there is an acute need of helping out the industry’s revenues not as a grant but as postponement without removing the financial imperatives. This also shows the willingness of the government and industry to work shoulder to shoulder. It had always been adversarial so far.

Another set of telecom reforms are likely to be announced in the next 3-4 months. What more do you think can be done?

We believe that whatever could have been done standalone by the telecom department has been done. The next reforms could touch on things like spectrum pricing and GST (goods and services tax). Let us keep in mind that there will never be a situation that there will be no demands from the industry. There will always be dialogue with the government.

Having said that, the biggest help that the government can provide us right now is reducing the spectrum prices. They are at absurdly high levels right now and that can be looked into. We would like to see that the spectrum is seen as a bundle, which means that access and back-haul is given to us as one. Spectrum identification and harmonisation is essential. There have been talks between the empowered groups of secretaries and immediate plans have been announced about which bands are going to be used for 5G. That is in line with the inter-ministerial group recommendations.

All the three companies have announced tariff hikes. What else do the companies need to do to tide over the current crisis?

They have been following a business plan. If you leave the stress and payable aside, all companies look internally and see how their revenues can be increased or how it can become profitable. This is an ongoing exercise. So changing environments bring changing dynamics and plans. Those who are in a little more stress may have to look at it more focused than others. But all of them have to look at it. This coupled with the help in increase in ARPU (average revenue per user) will certainly help them tide over the situation. They have been given a four-year moratorium and in these four years, if they do make changes, that should help.

Vodafone Idea is the most stressed among the three private telecom players. They have been trying to raise funds but nothing has materialised so far. As an association, does that worry you that investor confidence is still not there?

You have to go into the psyche of the investor as well as the timing of the reform. The reforms have just come. They are being studied and analysed. Coupled with this, the promoters have also announced that they will be putting in their own money. This gives a lot of confidence to external investors to put in their money. We will have to wait for some more time.

Given the environment that has now been created and that all of the other players as well as government wanted a three-player market, things are looking up. The cards that are being played are in favour of Vodafone (Vi) rather than its exit. The investor will weighs pros and cons before putting in money. What they are seeing is that the first lot of reforms have been announced and there could be another on the way. So you are an investor, logically you would wait for the second set of reforms to come.

Do you think that things are going as per plan when it comes to 5G or is there a delay?

There have been numerous cases that a good product has lost market share just six months after being launched. And not just in telecom. That is the case with 5G. If you jump into 5G when it is being formulated and tried elsewhere, you will pumping in a lot of money and you may end up with the technology but no use case.

Personally, I would say that it is better to be at second rung than to implement any technology than be at cutting edge. While you get a feeling with cutting edge that we are at the front, but is there a use case? Is there an industry which is waiting for 5G? Even now the use cases are being developed. The return on investment will come only after the use case is there. Things would have been worse had 5G been here 3-4 years earlier. Trials will bring some use cases, which may not be adequate for the return on investment, but there will be something. The demand and supply on 5G is slowly merging and it will match in due course of time.