New Delhi: The empowered group of ministers (EGoM) overseeing the auction of spectrum will discuss the lack of applicants for a sale this month in a meeting on Wednesday, but is unlikely to decide on reducing the reserve price, department of telecommunications (DoT) officials said.
On 25 February, the last date for telecom operators to apply for participating in an auction of CDMA spectrum in the 800MHz band, only Sistema Shyam TeleServices Ltd submitted its papers.
Existing operators did not apply as they are awaiting a decision from DoT on their plea to extend their licences. “A decision on this (renewal or extension) has not been taken as yet,” said one of the DoT officials mentioned above, declining to be named.
The telcos argue that according to clause 4 of their telecom licences they are to get an extension on mutually agreed terms whereas DoT has taken a stand that the operators can renew their licences only by obtaining spectrum in the auction.
DoT, asked by the Delhi high court to decide on the telco’s plea for extension of their licences, is likely to reach a decision this week, said the DoT official.
As for the auction, analysts say the reserve price needs to be reduced for the sale to be successful.
“The government of India should appreciate the challenges telcos are facing and take a strategic view of the sector and reduce the price significantly. Telcos should be consulted on the way forward,” said Hemant Joshi, partner, Deloitte Haskins and Sells.
Finance minister P. Chidambaram, who heads the ministerial panel, said in his budget presentation last week that the government expects around Rs.40,000 crore from spectrum auctions in 2013-14.
Meanwhile, DoT has given Videocon Telecommunications Ltd licences to operate in the six circles where it won spectrum in an auction in November, but has not yet obliged Idea Cellular Ltd and Telenor ASA-promoted Telewings Communications that also won start-up spectrum in various circles.
A second DoT official, also declining to be named, said Idea and Telewings had not fulfilled conditions set in the Letter of Intent (LoI) to be able to get the licences.
Idea has contested a new clause that disallows it from offering 3G roaming in circles where it has won spectrum. “The matter is still to be heard in the Supreme Court and TDSAT (Telecom Disputes Settlement and Appellate Tribunal),” a regulatory expert with knowledge of the issue said, requesting anonymity. “Despite that they (DoT) have arbitrarily put that clause in the LoI.”
For Telewings, the problem lies in clearances for the new entity. “The company holding structure and such has changed and we are not clear on whether they fit the necessary foreign holding regulations as yet,” the second DoT official said.
Last year, Telenor parted ways with Unitech in its earlier telecom joint venture, Uninor, and partnered with Sudhir Valia of Sun Pharmaceutical Industries Ltd to form a new joint venture, Telewings.