High price not a big concern for mobile subscribers: Voda MD

Tags: News
Vodafone India MD and CEO Marten Pieters today played down concerns of a possible rise in rates after high priced spectrum auction saying pricing accounts for only 10 per cent of issues mobile subscribers are faced with.

"Consumers deserve broadband, better quality today. If you survey customers, pricing is only 10 per cent of issues. There is lot more, about network quality. In mind of customers, there is lot more than pricing," he said on the sidelines of a Voice&Data Telecom event.

Pieters received 'Telecom Person of the Year Award' for driving growth at Vodafone even in the midst of policy uncertainties.

Another company, Videocon Telecom was given 'Emerging Telecom Player' for constantly achieving the highest percentage growth in subscriber net additions.

Pieters said high spectrum price paid by operators in February auction is not a major factor that will lead to increase rates of services.

"Spectrum is one of the input cost. Expensive spectrum does not translate in to higher pricing. Higher pricing is far more function of what happens in market," he said.

In February auction, seven companies won spectrum cumulatively for about Rs 62,162 crore.

Vodafone, Airtel and Idea Cellular won spectrum in premium 900 Mhz band, in which mobile signal cover double the area, by premium in the range of 55 to 110 per cent.

Pieters said that pricing will depend on function of "desperate operators with empty networks" which are working at prices that are not sustainable in long run.

"Due to high spectrum price coming up in last auction you will see separation of operators who have deep pockets and operators who dont have deep pockets. Operators who don't have deep pockets will lose appetite for this industry and in one way or the other they will have to be consolidated," he said.

The Vodafone MD said the company expects to gain revenue share in the market once consolidation starts in market.

He expressed concern over taxes levied on industry and said high taxes are adversely impacting investments in the country.

"We have seen lots of issues disappearing but in general levy of taxes, not only taxes--licence fee, user fees, it adds to too much. I was quoting a Planning Commission report, they had expected Rs 105,000 crore investment in 2012-13, the reality was it was Rs 31,000 crore," Pieters said

He said that lot of money is going to government as taxes and various levies but not enough investment being made in networks.

"In my view, take USO Fund. It takes 5 per cent charge across all operators which is in the end being paid by consumers. There is absolutely no reason for it because we have rolled out our network in most rural areas. Its like a tax. Why would you want to do that?" Pieters said.

He said recently spectrum auction fetched lots of money for government but industry is not left with enough money to invest in networks.

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