Vodafone lauds government’s telecom and spectrum reforms

telecomIn a rare gesture, a big telecom company has lauded the government’s recent changes in telecom policy.

The Modi government has, in recent months, cleared long-pending reforms such as allowing the trading of spectrum, cutting levies and initiating rearrangement (harmonization) of spectrum.

Usually, the relationship between the government and big operators tends to be strained owing to multiple law suits and tussles.

The comments have come even as Vodafone faces the most pressure among all major Indian telecom operators to get hold of more 4G spectrum very soon.

The company currently has 4G services in only 5 circles, while even smaller companies like Idea Cellular have services in 10 circles.

Vodafone did not expect the 4G market in India to take off as it did, and was banking on 3G services to remain in vogue for a few more years. However, with the entry of Reliance Jio, many Indians are moving straight from 2G-enabled phones to 4G-enabled phones as the prices of 3G and 4G phones are more or less the same today.

Vodafone’s situation, however, remains bleak because of the lack of availability of fresh spectrum in India’s two main 4G bands — 2.3 GHz and 1.8 GHz. The only two prominent 4G bands in which fresh spectrum is available is 2.1 GHz and 700 MHz. However, both cost much much more than 2.3 GHz — the most popular 4G band in India.

Harmonization, or juggling of operators’ spectrum holdings, is expected to release an average of about 10 MHz in each circle in the much sought-after 1.8 GHz 4G band. Vodafone can make do with as little as 5 MHz per circle, though it would need 10 to 20 MHz like its competitors to deliver reliable services.

“Harmonizing the available spectrum to offer additional quantum via auction is another progressive step by the Government (after spectrum trading and sharing), to maximize efficiency of this precious resource,” said Sunil Sood, MD & CEO, Vodafone India.

“With Digital India as the guiding vision and consumer demands evolving from voice to data, the telecom industry increasingly needs more of quality spectrum to be made available at reasonable prices. An efficient spectrum also directly results in providing customers with a superior network experience.”

He also said the move to reduce SUC from 5% to 3% of adjusted gross revenues (AGR) will bring in much needed relief to the highly capital intensive telecom sector.

“The telecom sector is severely debt laden (more than Rs. 3 lakh crore at last count and growing). This reduction in SUC charges from 5% to 3% will free cash-flows which can be invested towards further enhancing network and customer experience. It is a positive step that benefits the industry and is also in line with the TRAI’s recommendation of having a uniform, minimal SUC charge for all spectrum across the industry.”

In this context, the TRAI yesterday urged the government not to try to squeeze every last penny from the operators by withholding spectrum when it auctions the 4G-friendly 700 MHz airwaves next month.

Instead, the regulator said, the government should try to ensure that all spectrum is sold so that consumers get access to high-speed data services.