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Fresh threats over TRAI proposals

16 May 2012

Russia’s Sistema, majority owner of Sistema Shyam TeleServices (SSTL), has threatened to withdraw from operations in India if the government accepts the controversial proposals put forward by the Telecoms Regulatory Authority of India (TRAI) regarding revised base prices for spectrum, reports Zeebiz news. Sistema executive Andrey Terebenin railed against the proposals, saying: ‘If the government just rubber stamps everything, then we will pull out of India.’ Terebenin went on to criticise the recommendations as an attempt to make ‘quick money’ rather than ensuring that telecoms services are provided at an affordable rate in the long run.

Norway’s Telenor, which currently operates in India under the Uninor brand, has also raised threats to quit the Indian market, reversing its previous plans to remain in India through a new joint venture agreement with a different partner. ‘Telenor Group has stated that if these recommendations are accepted by the government as a final policy, then the company would be forced to exit India,’ Telegraph India quotes Uninor managing director Sigve Brekke as saying. Telenor centred its protest on the devastating detrimental effect to consumers and competition that the new pricing plan would have, reiterating previous claims that tariffs would more than double as operators looked to recoup the higher fees.

Should Sistema and Telenor carry through with their threats, they would join the growing number of foreign investors that have been forced to pull out of the Indian market, including Bahrain’s Bateleco and Etisalat of the UAE. As previously noted by CommsUpdate, Norway’s trade and industry minister cast doubts on future investment in India as a result of the 2G licensing debacle, and Russian diplomats have accused the Indian government of breaking the terms of their investment protection treaty.

Joining in the chorus of protests, Jamuldin Ibrahim, the CEO of Malaysia’s Axiata Group, which owns a 20% stake in Idea Cellular, has said that whilst Axiata is not planning on withdrawing, the terms of the new spectrum auction might limit future investment. ‘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,’ the Economic Times cites Ibrahim as saying. The Axiata head added that the Indian telecom sector would struggle to attract foreign direct investors should the TRAI’s recommendations be accepted.

India, Etisalat DB (formerly Swan Telecom), Sistema Shyam TeleServices (SSTL, MTS India), STel (India), Telenor India, Vi (Vodafone Idea Limited, VIL)

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