Expect big surge in revenue in coming years: tele secy

Telecom regulator TRAI has recommended a reserve price for 800 Mhz (used for CDMA service) and 900 MHz bands (used for GSM service) at least 2 times higher than that of minimum price for 1800 MHz band.

R Chandrashekhar, telecom secretary believes this will create a more conducive environment for the telecom sector going forward. He said, " I think the reserve price and the price for the spectrum has to be viewed keeping in mind several factors. Firstly, it is for a 20 year period. There are huge opportunities that lie ahead in this 20 year period." Secondly, there are changes which have been made with regards to payments terms from what was there earlier; there are also significant reductions in the spectrum usage charges.says Chandrashekhar. Below is the edited transcript of R Chandrashekhar’s interview with CNBC-TV18's Aakansha Sethi. Also watch the accompanying video. Q: The key concern everybody has that the reserve price is too high even compared to the 3G prices and this is going to mean an end of low cost telephony in India and how are telecom companies going to finance the spectrum cost? A: I think the reserve price and the price for the spectrum has to be viewed keeping in mind several factors. Firstly, it is for a 20 year period and there are huge opportunities that lie ahead in this 20 year period. We are entering the era of broadband, data is just picking up and therefore we should be seeing a big surge in the revenues. Secondly, there are changes which have been made with regards to payments terms from what was there earlier; there are also significant reductions in the spectrum usage charges. When you view all of these factors in conjunction with each other then the opportunity is quite significant and in fact there is enormous potential at this price. Q: Are you saying tariffs that have already been hardening and which are regulated only by TRAI, are not going to go up further? A: The question ultimately boils down to whether this would have any significant impact on the cost of operation and on the revenues. That is something which we will have to study. We have just received the recommendations a few hours earlier. We will have to do a quantitative exercise but so long as these prices translate into only a few percentage points of the total revenue, it should not have any significant impact on prices. Q: So are you likely to accept the recommendations as they are? A: I don’t think it is possible just a few hours after receiving the recommendations to talk about acceptance. We will have to study them and get clarifications on those points where we need to do that.