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Vodafone Idea is expected to unveil revival plan in a month
Vodafone Idea Ltd is expected to unveil a revival plan withn a month following the government’s acquisition of equity in the struggling telecom company, telecom secretary K. Rajaraman said in an interview. The return of Aditya Birla group chairman Kumar Mangalam Birla to the board of the telco is a positive step, and Vodafone Idea is in talks with financial institutions to raise the capital needed for the company’s 5G rollout plans, Rajaraman said.
The telecom department is preparing for the next spectrum auction in the second half of FY24, which may include the unsold spectrum from previous auctions and new bands, he said. With regard to satellite communication (satcom) services, he said the government must consider legal factors when allocating airwaves but indicated that if the telecom regulator recommends administrative allocation, the department will consider it. Edited excerpts:
Now that government has taken equity in Vodafone Idea and Kumar Mangalam Birla is back on the board, are the promoters putting more money into the company? Is the government monitoring the carrier’s performance?
We hear that they’re working with banks and financial institutions. They’re expected to get back to us with a revival plan, probably within a month. We keep getting monthly reports on their subscriber base and other parameters, but what we want them to do is to come back with resources – equity and debt – and we’re awaiting a final communication from them. And now that Mr Birla is back on the board, I’m hopeful they will revert to us soon with their plan.
Did the government set any conditions for taking equity or mandate parameters that have to be met by Vodafone Idea?
No, our only objective was to ensure a sufficient number of competitors are in the market and that the company revives. We look forward to that.
Has the telecom department asked them about their 5G plans, especially when rivals launched services seven months ago?
This is directly connected to the fundraising, and once that happens, I’m sure they will come out with a plan.
Adani Data Networks holds a unified licence, but they’re yet to begin operations. Have they sought an extension?
To my knowledge, we have not received any letter to that effect. They still have some 3-4 months left, so I would expect them to come back to us if they want a timeline (extension) because in millimetre (mm) wave, though we have some news reports of plans to use mm-wave by some telcos, I expect rollouts to follow a little later as presently, the focus of telcos is on the mid-5G band and getting the 5G basic services right. If there’s any such proposal (for an extension), we will examine it.
When is the next round of spectrum auctions expected? Is there a demand for more 5G airwaves?
We have some unsold spectrum already, for instance, in the 600MHz band. In addition to that, there are some candidate bands that can be introduced. We’re in the final stages of discussions, and we may make a reference to Trai (Telecom Regulatory Authority of India) within a month or two. I don’t expect the auctions to take place before the first quarter of next year or the last quarter of this year. That will give time for operators to complete their rollouts and reassess the spectrum requirements. 5G is in rollout mode at this point, and we haven’t reached a point where there is further demand in the market, but we will put to the market whatever spectrum we have, whether the market wants it or not.
Should more players enter the Indian market despite the competition and low ARPUs?
If you look at the global factors, the shortening technology life cycles—4G to 5G was just a few years—coupled with high capex requirements and trying to recover it in the shortest possible time. On top of that, we have low ARPUs in India, so the return on investment is the issue. This is a systemic market-related issue for which there are no easy answers. But despite that, India has the biggest advantage in a large-sized market, and still, we have space for about three to four players. So, from that point of view, the scale is expected to make up for these challenges. The government is also looking at policy reforms which can further lower the costs of doing business and create enabling market conditions for market participants. Digital is a core sector and has to offer services at affordable to enable the inclusion of the unconnected.
Will the government reduce licence fees?
I can’t say that. But, over the long term, government policy has to move in the direction of lowering the costs of doing business in whatever form.
Then why is the government planning to auction satcom spectrum, which will be a shared resource? In your reference to TRAI, there’s no mention of allocation outside the auction.
This reference is with Trai. They will decide on recommendations on the methodology, pricing, etc. They’re holding consultations, and I think they will come out with a very robust set of recommendations, as usual, that we can consider. We expect TRAI to finalise and send us the recommendations in a few months.
Spectrum for captive non-public services on 5G is also to be auctioned?
We haven’t taken a call as yet. Trai has asked us to identify the spectrum, and we’re in the process of examining it. Right now, the demand for the captive spectrum is minor. Only five companies have applied on the online portal. If anyone wants to set up, as of now, they have three options outside of taking their own spectrum. DoT has issued two CNPN (captive non-public network) licenses to National Capital Region Transport Corporation Limited and DP Jain and Co Infrastructure Pvt. Ltd so far.
The demand is for administrative allocation instead of auction.
There are legal aspects to it. For the same service, whether you can give by administrative allocation is n issue to be examined. The committee is examining it, but we haven’t taken a decision yet.
When is the new Telecom Bill expected to become law? Will the issues of OTT regulation and broadcasting within the same law be resolved?
The minister for communication has already stated that this is slated for the monsoon session (of Parliament), and we’re working towards that. The consultations are over. We’ve got everyone’s views. Now we’ll come up with a formulation which will be taken to Parliament. OTT is likely to be under light touch licensing, which is expected to be explained in the rules. The Act provides broad umbrella coverage for all the services and the right to regulate the market in some ways. But how each sub-sector will be regulated will be amplified through regulations and rules. We will take into account all the submissions made by the market, and we will do what is best for the citizens and market in the long run.
The issues cropping up in the Indian tower industry, does it raise any red flags for the government to intervene?
The infrastructure industry in India is a landmark; it’s much ahead of other countries where shared infrastructure can be hired by any operator. We believe that this industry needs to be further strengthened, so we’ve sent a reference to Trai for bringing in active elements like radio access networks, light optic fibres and so on, into the infrastructure license.
Has the issue of 5G being unavailable at airports been resolved with the ministry of civil aviation?
We’ve written to them. They’ve referred the matter to Boeing, Airbus and other aircraft manufacturers to check whether whatever we have proposed is acceptable to the aircraft manufacturers. One way of doing this is to take live readings in flying aircraft and check if there is any malfunctioning altimeters. We need to undertake some field studies. A committee comprising members from DoT and MCA has been set up to come to a technical solution. They’re yet to take a final call.
Vodafone Idea has given a contract to ZTE. Is the government reconsidering the list of trusted sources for telecom equipment?
We’re aware of the contract. We’re consulting the NSCS, because it’s under the trusted sources regime. We’ve sought a report from them. We’re looking at how the framework has worked, and in what manner it should be implemented since the regime is also some two-three years old. We’re trying to see if there are further improvements that should be made in consultation with NSCS.
Is the government willing to relook at the SAR (specific absorption rate) levels to improve the quality of services in 5G?
At present, India’s standards are one-tenth of the world norms, leaving little cause for any worry. We have set up a committee which is looking, but it will take some 6-12 months because bodies like WHO and ICNRP (International Commission on Non-Ionizing Radiation Protection) will have to be consulted. Whatever we have to do will have to be evidence-based.
On the quality of service (QoS), We’ve asked Trai to examine the upgradation of their regulations on the quality of service. QoS is a function of various parameters, including fiberization of towers, spectrum availability to telcos, cell density, etc.; DoT is working on fiberization of towers, making more spectrum available, and easy RoW (right of way) policies so that all telcos can connect all mobile towers through optic fibre. Trai and DoT will work together to ensure robust QoS norms. Livemint
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