Axiata chief voices concerns over Trai recommendations
Axiata chief voices concerns over Trai recommendations
New Delhi: Jamaludin Ibrahim, group chief executive of Malaysian telecom service provider Axiata that holds a 19.1% stake in Idea Cellular Ltd, met Indian officials to express concern over the latest recommendations on the auction of spectrum by the telecom regulator.
He met communications minister Kapil Sibal, department of telecommunications (DoT) secretary R. Chandrashekhar and new Telecom Regulatory Authority of India (Trai) chairman Rahul Khullar.
“We have expressed our serious concerns with the Trai recommendations to them. Our concerns are mainly with the reserve price, which is way above what we have seen anywhere else," Ibrahim said, adding that the reserve price is some 5-20 times more expensive than any other country. “Even if you adjust for GDP it is still very expensive," Ibrahim said.
His visit follows trips by other telecom chiefs seeking to convey similar opinions.
“One of two things will happen if the recommendations go through in their present form. Either a company will die a natural death or tariffs will have to be increased significantly," Ibrahim said.
On refarming, Ibrahim said that to take away all the spectrum and then reauction it is quite “traumatic".
He said there would have to be a balance between extra expenditure to fill gaps in the network and acquiring spectrum in the auction. The capex increase would be around two-three times in rural and suburban areas while for urban areas, the increased capex would be around 1.3 times depending on demography of the area. “We would have to invest a significant amount of money to essentially stay in the same place we are now rather than grow," Ibrahim said.
While the firm would not exit the investment, if it came to infusing more funds via a rights issue, “we will think hard before investing", he said.
“Idea is still one of the best performers among all the other Indian operators and if we had invested in any of them, then we would have exited the investment by now," Ibrahim said, adding that if the Trai recommendations are accepted in their present form, then the company would stay invested for longer than 10 years. “We usually stay invested for around 5-10 years," Ibrahim said.
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