COAI favours auction in 2018, wants market to settle down

New Delhi: Cellular operators' body COAI has said the government should not rush to spectrum auction this year and instead, allow the market to settle down in the wake of recent mergers and acquisitions.

COAI emphasised that the next round of sale of airwaves should ideally be scheduled in 2018.

"In the immediate context, we don't expect a whole lot of demand for the spectrum because mergers and harmonisation will lead to efficiencies in terms of use of existing spectrum. Companies like Idea Cellular and Vodafone (which have announced decision to merge in India) will put their spectrum together for efficiencies," COAI DG Rajan S Mathews told PTI.

Companies will be keen to wait a little more to see how the market dynamics plays out, Mathews said, adding that other factors which need to be taken into consideration are demand for data and smartphones.

"The problem with having an annual spectrum auction (that is being talked about) is that it requires three months of preparation, hence a 12-month window is too small... Companies cannot spend three months every year in recalibrating their strategy on airwaves," he said.

After buying airwaves, telecom companies also need time to order equipment, get infrastructure ready and be tuned in to the existing network.

Also, typically companies tend to buy spectrum keeping in mind their requirements for the next 2-3 years, he said.

"Other than the dynamics of licence requirement, a 2-3 year timeframe to conduct auction is more than adequate to allow for predictability and strategic planning by firms," he said.

Mathews' comments come at a time when the industry is going through a massive phase of consolidation, intensified by the disruptive entry of challenger Reliance Jio.

Idea Cellular and Vodafone have decided to merge in India to create the country's biggest telecom service provider with a customer base of over 394 million. Telecom operator Bharti Airtel, the current market leader, has said it will acquire Norwegian Telenor's India unit, and more recently announced the acquisition of Tikona Digital's 4G airwaves.

Last month, then telecom secretary J S Deepak had said the government is looking to make spectrum auction an annual event.

"We are not worried if there is no demand for spectrum. We are interested in giving the industry an opportunity to buy spectrum," Deepak had said on the sidelines of the Mobile World Congress in Barcelona just a day before he was named India's next Ambassador to the World Trade Organisation (WTO) from June this year.

Last week, however, in a written reply in the Lok Sabha, Telecom Minister Manoj Sinha had said the government had no immediate plan to provide telecom companies with an option to buy spectrum annually.