Regulatory uncertainty to impact telecom's future: Bharti

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Recent regulatory developments, which have led to huge uncertainty, could have significant implications for the future of telecom sector and impact India's global competitiveness, Bharti Airtel chairman Sunil Mittal said on Wednesday.

"The recent regulatory developments in India will have significant implications on the future of telephony and broadband, as well as India's global competitiveness," Mittal said in a release announcing the company's results for FY'12.

Meanwhile, Bharti Enterprises Deputy Group CEO and MD Akhil Gupta told reporters here at a conference, "This was perhaps the most disturbed year (2011-12) on the regulatory front...The uncertainty not only continues but it is huge."

Gupta said the government should take pro-customer and pro-industry decisions with regard to the spectrum pricing.

The comments follow the Telecom Regulatory Authority of India (Trai) recently issuing recommendations for the sale of spectrum, after the Supreme Court order that cancelled 122 licences for 2G (second-generation) telephony.

Trai has suggested a base price of Rs 3,622 crore for a megahertz (MHz) of pan-India spectrum, which is around 10 times higher than the price at which 2G licences bundled with 4.4 Mhz spectrum were allocated in 2008 under the then Telecom Minister A Raja.

According to Trai, a minimum of 5 Mhz spectrum should be allotted, which means that pan-India airwaves in 1800 MHz band will cost Rs 18,000 crore.

Besides, Trai has proposed the roadmap for spectrum refarming under which existing player will be made to use 1800 Mhz band as against the low frequency band of 900 Mhz. Telecom signals emitted using 900 Mhz cover large area compared to 1800 Mhz.

These proposals, if approved, will hit hard the incumbent operators, including Bharti Airtel.

"There is regulatory uncertainty for each of the operator in the sector. We are not sure what is going to happen next," Gupta said.

"Though Trai has provided roadmap for the sector, there is uncertainty regarding steep reserve price for spectrum, roll out obligations with regard to new investments, renewal of licences, refarming of 900 Mhz and others," he added.

Bharti Airtel today reported a 28.2 per cent dip in fourth-quarter net profit on account of higher interest costs and foreign exchange fluctuation losses.

For the entire 2011-12 fiscal, it fell 29.6 per cent to Rs 4,259 crore, but the company remains hopeful of its investments paying out.

"We have made massive investments, be it in 3G, 4G or in Africa. We believe that we have made all necessary investment in all forms...We enter next year as a very fundamentally strong year. We are poised to grow and exploit massive potential in India and Africa," Gupta said.

The company plans a consolidated capital expenditure of between USD 3 billion and USD 3.2 billion for FY'13.

However, this will exclude any potential payment for spectrum, Bharti Enterprises CFO Sarvjit Singh Dhillon said.

"The ability to make large investment will depend on the outcome of continuing debate on the recommendations. It is our prayer that government takes necessary decisions which are pro-customers, pro-industry, which will enable the industry to fulfil the common goal of industry and the government to take telecom not only just data but voice, deeper in to the country for inclusive growth," Gupta said.