The Ministry of Telecommunications and Telecom Regulatory of India (TRAI) has been in the thick of things with the on-going spectrum allocation auctions. This, the third attempt by the regulator to allocate airwaves looks to be heading in the right direction with competitive bidding seen from all the major telecom players and the biggest entrant into India’s telecom space – Mukesh Ambani’s Reliance Jio Infocomm Limited (RJIL).
With RJIL’s entry into the market, many analysts were concerned about the deep-pocketed firm bidding for a large chunk of the airwaves and sow the seeds for another tariff war. However, the Chairman of TRAI, Rahul Khullar was adamant that the entry of RJIL into the voice segment after the ongoing auctions would not start another tariff war. In part, this is due to incumbent operators such as Vodafone, Airtel. IDEA, etc., were experienced in this regard, especially after what happened in the previous auction cycle during which they were hit hard by the rate wars.
Khullar was quoted as saying, “I don’t think any tariff wars are going to break out, quite simply because the industry has very badly burnt its fingers by it. When the thinking of these companies was customer acquisition and market share at any cost, price as a variable was your only instrument. Then it was a race to the bottom. Nobody consciously is going to do that.” The aftermath of the 2010 auctions had a huge impact on the industry as a whole. Also, the sector’s financial health has considerably improved since then and fears of a repeat were allayed by the TRAI Chairman.
Khullar also took a swipe at the government saying that the Telecom Ministry’s decision to levy a higher spectrum usage charge was not far-sighted and in the best interests of all parties.
The recently conducted bandwidth sale was hotly contested. The bids on the second day of the auction rose considerably, with those for Mumbai, Kolkata and Delhi rising 68.3%, 46.8% and 47.4% over their base price respectively. This led to fears that the industry scenario post the 2010 3G and broadband wireless spectrum auctions could be revisited. However, this scenario seems unlikely.