Idea will rebid for 2G spectrum based on pricing: MD

Himanshu Kapania, managing director, Idea Cellular believes that the current recommendations are aggressive and retrograde. They will push the growth of telecom sector far behind. "The overall policy environment has to ensure level playing field," he said in an interview to CNBC-TV18.

Idea will rebid for spectrum based on number of slots that are made available and final auction price. Reports indicate that government may price the spectrum at about Rs 1,400-1,600 crore a megahertz. If spectrum is priced based on the current proposal then tariffs could rise by Rs 0.30-1 a minute in the metros, he cautioned.

Also Read: Voice market still far from maturing, says Idea's Kapania

Below is the edited transcript of Kapania’s interview wit CNBC-TV18. Also watch the accompanying video.

Q: Given the kind of early signs you heard from the regulators on spectrum pricing, what is Idea’s strategy this time around to regain its seven cancelled licences or for rebidding?

A: Idea Cellular believes that during the last five years policy environment has been generally in the dark period, but Idea’s strength remains managing of market and its management’s strength to build customers.

As specifically our strategy on gaining back our spectrum from the cancelled licences, I think that is largely going to be dependent on what is going to be the policy of the government in terms of number of slots as well as the final auction price that is determined. The policy that we will apply is that our decision should be in the interest of all our stakeholders specially our investors.

Q: You heard the initial recommendations from Telecom Regulatory Authority of India (TRAI) and the Department of Telecom (DoT) and that looks like its going to be significantly high. Can you give it a pass or given the comparative nature of the market you would need to bid and that might put pressure on your earnings and also your balance sheet?

A: I will repeat Idea Cellular is one of the pioneering telecom company, we are a serious telecom player. We will continue to build the business in the country but having said that we will also fight for our rights. We believe that the overall policy environment has to ensure level playing field.

There cannot be a situation where there are going to be operators who are operating at a different price point for the basic raw materials spectrum vis-à-vis existing operators. We believe we will find answers and if necessary agitate to make sure that the company is no way at any disadvantage vis-à-vis existing players.

Q: As a market player what is your observation on the kind of price recommendations that have been put out and whether at those prices any operators will find it remunerative or profitable or even feasible to go out and bid. Is there a fear of an auction failure if the government persists on such higher prices?

A: You are right. I will repeat what the company has said. First and foremost our view remains that over the last five years we are going through a dark period on policy. There is a lot of uncertainty and it is not inline with the long-term objective stated of the government of growth both in the rural sector as well as growth in the wireless broadband business.

We believe the current set of recommendations are aggressive and retrograde and will push the growth of telecom sector far behind. Having said that, our calculations states and we have shared it both with TRAI as well as DoT and even made presentations to all concerned ministries that if the raw material price of spectrum is going to be priced at the current proposal there will be a direct impact on tariff and it may wary between 30 paise on an average to as high as Rs 1 in the metros.