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May 04, 2012, 11.17 AM IST | Source: CNBC-TV18

Govt is taking from masses & giving to classes: Uninor

In an interview with CNBC-TV18’s Siddharth Zarabi, managing director, Uninor, Sigve Brekke explains what is so worrisome about the business environment in India’s telecom sector after parent company Telenor had to write off USD 682 million due to losses in India

Govt is taking from masses & giving to classes: Uninor

Norwegian telecom company Telenor will have to write off USD 682 million on losses incurred due to the uncertain business environment in India's telecom sector. The company has also made it clear that if the recommendation from TRAI in its current form, was approved by the department of telecommunications (DoT), it will be almost impossible to participate in the auction.

In an interview with CNBC-TV18's Siddharth Zarabi, Uninor managing director, Sigve Brekke explains what is so worrisome about the business environment in India's telecom sector.

Below is an edited transcript of the interview. Also watch the accompanying video

Q: What is so troubling about the telecom sector in the country?

A: For two years now, we have been fighting everyday in the market, against competitors, for customers and it has been a tough ride and a lot of hard work.

But today it seems the environment is very difficult to continue with. If I factor in the the current recommendations of TRAI into my business plan for the future, it is unviable to continue operations in the country.

Q: What is wrong with the TRAI recommendations?

A: First of all, the recommendations are based on a future value of data spectrum. So, TRAI is trying to find a way to first put all regulatory issues that currently are being debated into a package.

Secondly, it trying to find out the future data play in this industry and based on that, derive everything back till today. That's why the reserve price for the 5 and 1800 megahertz spectrum is the discovery price for 3G.

All that is fine, but to take a future position into current situation is to take from the masses and give to the classes.

Q: Considering the fact that decision on this will be made within the next 7-10 days, the DoT said that by May 10 everything will be in place. Will Telenor’s board take a a decision soon after that?

A: We need to take it one day at a time. If the government is not coming out with its policy within the one-month framework as the Supreme Court has asked them to do, then we are talking about uncertainty in the coming three weeks.

Only after the one-month deadline set by the Supreme Court is over, we will make our decision.

Q: What is the reserve price for the auction that the TRAI has set for 5 megahertz in the 1800 band by your estimates?

A: The reserve price for the spectrum should be the same reserve price for the 3G as we went into the 3G auction week.

Q: The TRAI decides to make it 3G discovery price?

A: Exactly.

Q: Is that sensible?

A: No, it’s not sensible. Basing a spectrum value, for future data on a spectrum value for today voice does not work.

Q: For a company like yours who did not participate in the 3G auction, for a completely different band how sensible or logical is it to decide the reserve price, which is based on 3G discovery price, should be the price for all future auctions for spectrum?

A: No. it is not sensible. We cannot go in the past and find solutions today but you cannot go 20 years in the future either to find solutions today. The current objective for the government should continue to ensure tariffs are low enough for people to afford. Competition is big enough to increase penetration and that is the current demand.

When Kapil Sibal entered the 4G trial for one of the operator he said, “the reason why 3G has not been accessible so far is that we went way too high on the 3G spectrum”. The operators paid too much for the spectrum and they are not able to deliver those services.

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READ MORE ON  Telenor, losses, TRAI , DoT, auction, Uninor

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