Norwegian trade minister Trond Giske has written to finance minister Pranab Mukherjee to express the European nation’s concern over the telecom regulator’s recommendations on spectrum auction, claiming that the proposals if accepted are likely to jeopardize Norway-based Telenor ASA’s investments in India.
“I note that the recent recommendations issued by the Telecom Regulatory Authority of India (Trai) have created considerable uncertainty and grave concern about Telenor’s possibilities to continue operations in India,” said the letter, dated 12 May, reviewed by Mint.
A file photo of Norwegian trade minister Trond Giske
The letter spells out three major concerns of the Norwegian government regarding Trai’s recommendations. Giske asked the Indian government to make sure that the auction happens within “the already communicated timelines”.
The minister said that Trai’s recommendation of auctioning 5MHz of spectrum is far too little to allow new operators to participate in the auction and recommended that all the available spectrum in the 1,800MHz band be auctioned.
If limited spectrum is being auctioned then a limited number of bidders should be allowed to participate, Giske said, adding that the roll-out obligations for telecom networks puts “a very heavy burden on newcomers in the sector”.
The trade minister, however, did not raise issues on redistribution of spectrum in the 900MHz band or the high reserve price recommended by Trai, which most Indian telecom companies have opposed.
On 2 February, the Supreme Court cancelled 122 licences allocated to nine companies, including the Indian unit of Telenor, in January 2008. Uninor is a joint venture company between Telenor and Unitech Ltd. The court also ordered the telecom regulator to come up with recommendations on the auction of spectrum to be surrendered by the nine companies.
Giske met employees of Uninor, communications minister Kapil Sibal and Montek Singh Ahluwalia, deputy chairman of the Planning Commission, on Saturday.
On 13 May, Trai reiterated its earlier recommendations of setting the base price for spectrum to be auctioned at Rs 3,622 crore per MHz of pan-India spectrum in the 1,800MHz band. This is around 10 times more than the price at which 2G licences bundled with 4.4MHz spectrum were allocated in 2008 under former telecom minister A. Raja.
According to Trai, a minimum of 5MHz spectrum should be allotted, which means that pan-India airwaves in the 1,800MHz band will cost a minimum of Rs 18,000 crore.
Earlier this month, Giske had said that if Telenor’s $3 billion investment were harmed unnecessarily, it would have deep political implications.
“India’s reputation as an investment-friendly nation will suffer great damage,” the minister said demanding that the government reject Trai’s recommendations on the spectrum auction.
Giske also said the loss will be the single-biggest suffered by any Norwegian company in any country.