Idea Cellular partner Axiata expresses concerns about new Spectrum price

Telecom Lead India: Malaysian telecom giant Axiata, which
has around 20 percent equity stake in Idea Cellular, has expressed concerns
about the high spectrum reserve price that will adversely impact their business

“We are here for the long term, so we are not exiting. But the extent of
how much we invest will be determined vis-a-vis the additional cost of
spectrum. It will have to be carefully considered,” said Axiata President
and Group CEO Jamaludin Ibrahim.

Idea Cellular and Axiata officials met Telecom Minister Kapil Sibal, Department
of Telecom (DoT) Secretary R Chandrashekhar and TRAI Chairman Rahul Khullar to
highlight their concerns on high reserve price and refarming.

“We have no objections to the principles behind what the government is
trying to do… As a major investor in Idea, we think that our business case,
viability of the industry and at the end, the consumer will be effected. It
would be difficult for the industry to bid at the suggested rates and continue
offering the services at current prices,” Ibrahim added.

On refarming, Idea Celluar said it doesn’t happen too often where the spectrum
is just taken away from you. Shifting to other bands will incur huge Capex and
Opex on the company, according to a report in Economic Times.

“A back of the envelope calculation-based on the kind of electronics that
would have to be removed and including BSNL and MTNL the reckoning was
somewhere around Rs 25,000 crore would have to be written off,” said Idea
Cellular Chief Corporate Affairs Officer Rajat Mukarji.

Additionally, there could be a Rs 1.25 lakh crore of Capex which would have to
be incurred to compensate on a business as usual situation. On refarming of 900
MHz of spectrum, TRAI has maintained its stand.

Spectrum refarming is a concern for Bharti Airtel, Vodafone and Idea Cellular
as they will have to shift to 1800 Mhz band from the current 900 Mhz band. This
would increase their cost of infrastructure as they would have to make fresh
investments in equipments.

Axiata has invested $2 billion in India but now due to the changed scenario,
the company will have to re-consider additional investments in the country.

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