High Spectrum Price Can Deter Investments, Says Vodafone CEO

Ahead of the biggest ever telecom spectrum auction in India, UK's Vodafone Monday warned that a high price for airwaves can hit investments in the country.

"The pricing of spectrum should reflect the internal capital of the Indian market and the fact the tariffs are very low in India. If you set prices which are too high for spectrum, money is not going to go into investments. There must be a proportionate between cost for spectrum and the economic condition of the country," Vodafone Group CEO Vittorio Colao said in Barcelona.

His comments came weeks after regulator Trai proposed base price for sale of spectrum in seven bands that could fetch up to Rs. 5.36 lakh crores.

The spectrum sale, wherein the estimated proceeds can be more than double the total annual revenue of all telecom companies that is Rs. 2.54 lakh crores, is likely to be held in May/June.

Colao said there should always be return on investment. "The return on capital is very important. We make a lot of money, but we also invest a lot of money and the gap between the two is sometimes not as much as people think. There is also a second thought sometimes that prices will go up if there is consolidations overtime.

"But, if you look at the price (per minute), they are going down and down. So, when people are wondering around the prices in our sector, I think it's not fair," Colao said.

The regulator had recommended record base price of Rs. 11,485 crores per MHz for 700 MHz which alone. If all available frequencies get sold at Trai suggested price then it can alone contribute over Rs. 4 lakh crores.

Asked about Reliance Jio launching services which will intensify competition, Colao said, "As far as Jio is concerned, I know it is going to be formidable competitor... We will be as ready as we can to welcome them. But, we have competitors everywhere in the world and now it (Jio) is going to be another powerful one. But, it (Jio) is, just another powerful one."

He said they have launched 4G in India in couple of cities and progressively launching everywhere. "Having said that, it is also a 3G market for many years and we continue to be there. So, we will keep both technologies in parallel - I want to stick on both 3G and 4G," he said.

On the tax notice by the Indian government, Colao said arbitration case is going on.

"We have said what we had to say about that notice and we have pretty good relations with the government. Arbitration keeps going with no disturbance, I would say," he added.