There appears to be a disagreement between how the Telecom Minister, A. Raja, and the Prime Minister, Manmohan Singh, on the issue of allocation of spectrum. At the India Telecom Summit in Delhi yesterday, the Prime Minister called for a fair, transparent, equitable and forward looking policy on spectrum allocation, at the same time, pushed for efficient use of spectrum and to ensure that the government makes money off the sale of spectrum. This hints clearly at an auction of spectrum, but A. Raja, the Telecom Minister has said that 2G spectrum cannot be auctioned because of legal issues; 3G spectrum, however, will be auctioned. Apparently, the government has received commitments of fresh investment $2 billion in IT & Telecom in the next one year.
Readers should bear in mind that Reliance Communications and Tata Teleservices have opposed auction of spectrum; Ratan Tata had earlier told CNBC-TV18 that the earlier system punished the co by allocating less spectrum, for using a more efficient technology. Mint adds that Airtel has offered to pay almost Rs2,650 crore for 4.4MHz of spectrum, willing to raise the offer if spectrum is auctioned, while Idea Cellular is willing to pay Rs. 1650 crore for the same amount of spectrum.
Meanwhile, the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) has refused to stay the issuing of new licenses and the allocation of spectrum. That means that Reliance Communications will get a GSM license, and the spectrum that comes as a package deal, and Tata Telesevices. HFCL and Shyam Telecom had also deposited licence fees for GSM licences. The COAI, the GSM lobby, had walked out of a Department of Telecom committee formed by DoT for reconsidering the allocation guidelines. They intend to go to take the matter to court, reports ET.
Going to court will inadvertently delay issues, but it appears to be the only way out of this mess; whatever happens, there’s marketshare, and a lot of money at stake. Remember that India has a teledensity of around 20 percent, and everyone wants a piece of that pie. The spectrum allocation will impact company market valuation.
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