Wholesale roaming pricing in India may increase if Mr. Rahul Khullar, chairman of the Telecom Regulatory Authority of India predictions come true. We publish here an interview made by the Economic Times to Mr. Rahul Khullar on the spectrum auctions that just ended recently. Mr. Khullar, who is going to retire next month, said that the auction’s sale will lead to a hike in voice rates and the industry will begin to divest non-core assets to help pay off debt.
Do you think the spectrum auctions were a success?
The telecom department chose maximisation of revenue and earned over Rs 1.09 lakh crore. I believe that it will affect the industry. Fortunately, except for the renewal spectrum, one hasn’t seen mad bidding like one saw in 2010. So, the impact will not be as adverse. I suspect the payouts will put some pressure on Ebitda margins immediately in 2015-16 and over the course of 2015 and 2016, depending on the ability of the banks to provide credit, that will decide investments.
What does that mean for the sector, going forward, especially on consolidation?
The industry will increasingly see asset sales. Operators will divest from non-core businesses to get money and repay their debt. If the trading and sharing guidelines are brought in, then we will see some consolidation. The M&A rules haven’t brought in any of the much-needed consolidation. Most buyers will be interested in just buying out the assets. So, spectrum trading rules are of particular significance here.
What do the high bid levels at the auction mean for a mobile phone user?
Cost increases at the end will have to be passed on to consumers in some form. I don’t think operators will hike the data rates as they are currently focussing on getting higher levels of penetration. Only voice tariffs will go up. I think the hike will be gradual and it won’t pinch a mobile phone user. However, the current payout means operators will experience hike in cost impact by about 6-7 paise and this will be passed on in the next year or so.
The quality of voice and data services is worsening. Please comment.
We are fully aware that the quality of service is deteriorating. It is because of scarce spectrum and inability to install enough towers. Operators have very low spectrum and it is indeed difficult to provide high-quality services with such quantity. Secondly, this can be overcome to some extent through installing more towers. But the massive EMF radiation scare has created problems. Despite global health bodies like WHO saying that towers are safe, it is increasingly becoming difficult to install towers. Without a tower, there can be no radio communication. If you don’t want communication, get rid of the tower, but you can’t have your cake and eat it too.
What would be your biggest accomplishments and disappointments in your three years in office?
It is not fair on us to judge ourselves. We at the Authority have tried hard to rebuild trust in the institution. Individuals do not matter. It has been a slow uphill battle, but some trust has been brought back. Coming to disappointments, the one has been that in the broadcasting and telecom sectors, lots of recommendations have been piled up but no decisions have been taken. Second is the most unfortunate decision to postpone digitisation of cable services. The latter is more important.
What should the government do to improve the sector’s fundamentals?
The government must announce, very clearly, what amount of spectrum and in which band it will reclaim from which government agencies. It must make the timeline very clear. It must also make clear as to when it plans to auction those airwaves. It also must take up the audit of spectrum usage. Just this clear communications from the government will alone help the telecom sector grow a long way.
What decisions/recommendations can we expect from Trai before you leave?
Most of the things will get done this week. So in total, four recommendations will come out for sure. Two will come on Tuesday and the rest by the end of the week. It will be on MVNOs, broadband, roaming and emergency response system.