8 telcos join race for Feb airwave auction

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Rel Jio surprise entry; Loop, Videocon stay away

8 telcos join race for Feb airwave auction
The slugfest for spectrum got under way with eight telecom services companies entering the fray for 1800 mhz and 900 mhz airwaves in an auction beginning on February 3.

Both the Ambani brothers, Mukesh and Anil, have thrown their hat in the ring with Reliance Jio and Reliance Communications deciding to put in bids. Bharti Airtel, Vodafone, Tata Teleservices and Idea Cellular will also jostle for airwaves along with Aircel and Uninor (Telewings).

With eight established players in the ring, the government is confident of realising more than the targeted Rs 40,874 crore non-tax revenues from the spectrum sale and usage charge. This will help finance minister P Chidambaram arrest the fiscal deficit at 4.8 per cent, much below estimates made by independent consultancies and rating agencies.

Loop and Videocon Telecom have not submitted applications for spectrum in the February 3 auction. State-run BSNL and MTNL, which recently surrendered unused spectrum in different bands, also have not put in bids.

The entry of Reliance Jio of Mukesh Ambani is the only surprise, as it is busy working on the launch of 4G wireless broadband services. Auctions for the two separate frequency bands will begin on February 3. Wednesday was the deadline for cellular operators to submit initial interest for participating in the auction. Withdrawals will be allowed till January 27.

Telecom secretary M F Farooqui said on Wednesday that the auction would go on as per schedule without any revision. He was hopeful that by next weekend, that is much before the auctions, the annual spectrum usage charge (SUC) would be fixed and clarity would emerge on the merger and acquisition guidelines.

The government proposes to levy SUC of 3-8 per cent linked to annual revenues of the telecom companies. Trai recommended a higher SUC of 3-5 per cent for all telecom companies from April 1 this year.

Last month setting aside all objections, the cabinet committee on economic affairs (CCEA) adopted the Telecom Commission’s recommendations to sell pan-India 1 mhz spectrum in the 1800 mhz band at Rs 1,765 crore. It also cleared the floor prices for 900 mhz spectrum in Delhi (Rs 359 crore), Mumbai (Rs 327 crore) and Kolkata (Rs 125 crore), based on the recommendations of a ministerial group.

Under the auction mallet are 403 mhz 2G spectrum in the 1800 mhz band and 45 mhz in the 900 mhz band. For the November 2012 auctions, Trai had recommended a pan-India reserve price of Rs 3,622 crore for 1 mhz in the 1800 mhz band. In the January, 2013 bidding, the regulator had brought the price down to Rs 1,496 crore. Plus, it asked for a 60 per cent cut in the reserve price for spectrum in the 900 mhz band in Mumbai, Delhi and Kolkata.

Trai had also recommended re-farming of spectrum vacated by Bharti Airtel and Vodafone without any ‘reservation.’

Loop Mobile, Bharti Airtel and Vodafone have made separate petitions before the telecom disputes settlement appellate tribunal for automatic extension of their licences without having to bid for the 900 mhz spectrum in Mumbai.

Confirming participation in the auction, Bharti Enterprises’ deputy managing director Akhil Gupta said, “We will await a government decision on spectrum usage charges.”

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