Indian Telecom Industry is constantly making headlines and hence compelling us to cover it on our blog site. This time Indian Telecom Regulator (TRAI – Telecom Regulatory Authority of India) has come out with a unique decision to charge the operators for the existing spectrum on GSM 900 over and above the 6.2 Mhz. It suggested that a one-time fee be benchmarked against 3G auction pricing.
Bharti, India’s biggest cellco, said the proposals were “shocking, arbitrary and retrograde” and go “against all existing global norms for spectrum allocation and efficiency.”
Vodafone India called the recommendations “opaque, illogical and discriminatory.”
Analysts estimate that Bharti and Vodafone will have to cough up $700 million and $650 million respectively in spectrum charges if the proposal is signed off by the government, said the FE.
The additional burden comes amidst fiercer-than-expected bidding in India’s 3G auctions and the prospect of billions of dollars of 3G rollout costs. Bids for pan-Indian spectrum yesterday reached the $3.21 billion mark, more than twice original estimates of $1.3 billion.
The Economic down time and the ever increasing greed of government to mint loads of cash from the telecom industry has taken its toll on the upcoming Indian 3G License auction. A total of nine companies registered their interest in bidding for Indian 3G spectrum ahead of the deadline last Friday, though foreign players were notable by their absence.
According to a report in India’s Business Standard newspaper, existing operators Bharti Airtel, Vodafone Essar, Aircel, Reliance Communications, Tata Teleservices, Idea Cellular, STel, Etisalat and Videocon all submitted applications ahead of the 19 March deadline. Bharti, Reliance, Vodafone and Idea were also among the 11 companies which filed separate applications for the so-called Broadband Wireless Access (BWA) spectrum, which is being auctioned off alongside the 3G bandwidth. Several foreign players – including US-based AT&T and Verizon, and Australia’s Telstra – had been tipped to enter the fray but experts say that the high-cost of participation may have put them off. “There was an incremental burden on the new foreign entrants – of acquiring a unified access service license (UASL) for INR1,650 crore, apart from bidding in the 3G auction,” said Prashant Singhal, a telecom analyst at Ernst & Young. “[This] would have increased the cost substantially.” Other analysts suggest that some foreign players may be looking to partner with the new 3G licensees at a later date. However, we believe that it was the high cost of the 3G license and the limited number of slots that were made available that has negatively affected the investment scenario for any foreign operator.
India’s Department of Telecommunications has said that it will auction three slots of 3G spectrum in 17 telecom service areas – and four in the remaining five zones – when the auctions begin on 9 April. India hopes to raise INR350 billion (US$7.6 billion) from the auctions and has fixed a base price of INR35 billion (US$760 million) for nationwide spectrum. However, analysts predict that high demand for spectrum could see firms required to spend between US$1 billion and US$1.5 billion to secure a nationwide 3G footprint. Some smaller players – notably Telenor’s Uninor – have already ruled themselves out of the auction process.
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