Thursday, Aug 09, 2012
Dubai: The Indian government has set November 12, 2012 as the new date for auctioning second-generation spectrum, a delay of at least two months beyond the deadline set by the Supreme Court for its completion, raising concerns of more uncertainty among telecom companies.
Under the new schedule, the new licence structure will be finalised by October 1, and submission of application will start on October 2. Interested telecom operators will have to submit their bids by October 9, while a final list will be announced on November 6. The government expects to complete the bidding process by January 30, 2013.
The list of applicants will be finalised on November 6 and mock auction will be held on November 8.
The group of ministers, headed by finance minister P. Chidambaram, met on the timeline for the 2G auction and decided to push the date to November.
The Supreme Court had set the deadline for August 31.
But, the government found it difficult to complete the auction process in the stipulated time.
So, government has decided to ask for additional time to extend the auction process. It is likely to file a petition before Supreme Court to seek additional time for completion of process.
The Union Cabinet had finalised Rs140 billion for 5 MHz spectrum in 1800 MHz band and Rs182 billion for 5 MHz spectrum in 800 MHz band as the base price.
The government has offered 13.75 MHz of spectrum in the 1,800 MHz band and as much as 5 MHz in the 700 MHz band for CDMA operators. It can accommodate three new operators, two being GSM, who’d be offered 5 MHz each and one CDMA player who’d get a minimum of 2.5 MHz.
Under the staggered payment option scheme, GSM operators in 1,800 MHz have to pay only 33 per cent of the auction price upfront and CDMA operators only 25 per cent.
“Our belief is that all the offered spectrum in metro and A-category circles may not find takers, unless a surprise greenfield [new] telco like Reliance Industries enters the fray,” said telecom analyst Sanjay Chawla of JM Financial Institutional Securities.
New telecom operators who bid for 1,800 MHz have to shell out Rs232 billion if they get spectrum at the base price of Rs140 billion. If the price goes up 1.4 times, they need to fork out Rs325 billion over 12 years for 5 MHz.
A new CDMA operator, who has to pay 1.3 times more than what a GSM one does,will need to fork out Rs158 billion for 2.5 MHz of spectrum.
“I believe the reserve price for 2G spectrum as approved by the cabinet is excessively high. There is no rationale to support why the CDMA spectrum should be priced 1.3 times more than the GSM spectrum,” said Vsevolod Rozanov, president and chief executive officer of Sistema Shyam Teleservices.
Sistema Shyam, a joint venture between Russia’s Sistema and India-based Shyam Group, stuck to its earlier demand that the reserve price be Rs16.58 billion.
To protect its interest it has filed a curative petition before the Supreme Court.
“I am hopeful that the highest court of the land will look into the merits of SSTL’s case and will give us justice,” he said.
“Such delays are a matter of concern to us as they prolong the uncertainties we face. We urge the government to conclude the auction process at the earliest.”
Telecom industry lobby group Cellular Operators Association of India said the price was too high and would result in an increase of 37-49 paise per minute in call tariffs.
“The three smaller operators —Etisalat, Videocon and Swan Telecom—have already exited the industry. The Indian subsidiaries of Telenor and Sistema are most likely to pull out either completely or in part. The fifth and sixth largest private operators (subsidiaries of Tata and Maxis) may also look to consolidate to strengthen their position, as both operators have been unable to register an operating profit so far,” the Fitch report said.
By Naushad K.?Cherrayil Staff Reporter
Gulf News 2012. All rights reserved.
