Airtel, Videocon to bid for spectrum; RIL, Sistema stay away

Airtel, Vodafone, Videocon and Tata Teleservices are among the telecom biggies who applied Friday to bid in the upcoming spectrum auction, but Reliance Industries and Russia's Sistema surprised by staying away.

Updated: Oct 19, 2012, 23:20 PM IST

New Delhi: Airtel, Vodafone, Videocon and Tata Teleservices are among the telecom biggies who applied Friday to bid in the upcoming spectrum auction, but Reliance Industries and Russia's Sistema surprised by staying away.

Billionaire Mukesh Ambani-run RIL, sitting on a cash-pile of Rs 79,159 crore, was widely anticipated to bid in the November auction of airwaves to complement its wireless broadband services with voice call facility.

But RIL, like Anil Ambani-controlled Reliance Communications, has not submitted application to participate in the bidding, according to sources. The deadline for submission of applications ended this evening.

Videocon Industries, which had in 2008 got pan-India 2G or second-generation spectrum for Rs 1,658 crore, has submitted applications to bid for both GSM and CDMA technologies.

It is being intensely speculated that Videocon may join hands with RIL after the auction with firm's Chairman Venugopal Dhoot confirming his group's "friendship" with the Mukesh Ambani-run firm and not ruling out any future possibility.

"We have been having very good friendship with RIL. We are always getting advise from them. I don't commit (what will happen in future) but Mukesh Ambani's advise will continue. Yesterday only I met him," Dhoot told a TV channel.

RIL had not bid for BWA spectrum in 2010 but later went on to acquire Infotel Broadband which had won a pan-India spectrum for offering high-speed Internet services. Broadband does not has permission to provide voice calling facility.

Another surprise was Sistema, which decided against the participation saying that it has been "unfairly penalised" by the February order of the Supreme Court.

The Supreme Court had cancelled 122 licences, including 21 of Sistema Shyam Teleservices Ltd -- the Russian firm's Indian joint venture. Videocon's 21 permits were also among those cancelled.

Norway's Telenor, whose 22 licences with Indian joint venture with realty firm Unitech were among those cancelled, has applied as an independent entity.

Dhoot confirmed making application for both GSM and CDMA but said "the final decision on technology selection will be made on November 11 (a day before the auction begins)."

The government has fixed Rs 14,000 crore as the minimum or base price for the auction that is to begin on November 12. This is several times Rs 1,658 crore price at which pan-India licence bundled with 4.4 megahertz of spectrum was given by the then Telecom Minister A Raja in 2008.

Sources said Vodafone has submitted applications for 17 circles in 1800 MHz band, Bharti Airtel for around six circles, Videocon for 15 GSM and around 10 CDMA circles and Tata Teleservices for three circles where it lost its CDMA permits.

The number of circles for Idea Celluar and Telenor could not be immediately ascertained.

Sistema-Shyam (SSTL) said it has "consistently maintained that it has been unfairly penalised... And has filed a curative petition seeking to restore (our) licences."

The company said there was no finding by the CAG report that CDMA spectrum was equally or anywhere near in demand as GSM. "It is hopeful that the highest court of the land will speedily look into the merits of its case and will give it justice," the statement added.

Telenor said it decided to submit the application but a final decision about its participation will be taken later.

"Telenor Group confirms that it submitted its application for pre-qualification in the 1800 MHz band spectrum auction," the company said, adding, "A final decision on whether or not to participate will be made before the auction starts."

Rajan Mathews, director general of Cellular Operators Association of India (COAI) said that absence of players like RIL, RCom, Aircel and SSTL is because of the high reserve price of the spectrum.

"We have always maintained that there will be muted demand for the auction process as the reserve price set by the government is too high," Mathews said.

He added even those players, who have shown interest may be bidding for selected circles.

DoT is conducting auction of airwaves frequencies in 1800 Mhz, being used for GSM services at present, and 800 Mhz band, being used for CDMA services, after the Supreme Court cancelled 122 telecom licences belonging to eight different companies in 2G scam.

The cancelled licences included 22 permits of Uninor (joint venture between Unitech Wireless and Norwegian firm Telenor), Loop's 21, Sistema-Shyam's (SSTL) 21, Etisalat-DB's 15, S Tel's 6, Videocon's 21, Idea's 9 and three licences of TTSL.

The apex court has asked government to complete spectrum auction by January 11, 2013 and warned that failure to meet the deadline would invite "contempt" action against erring officials with "exemplary" cost.

The government will auction maximum of 11 blocks of spectrum in 1800 Mhz band, being used for GSM services, each having 1.25 Mhz of airwaves frequencies.

New players and companies whose licences were cancelled by the Supreme Court will have to bid for minimum of four spectrum blocks in a service area to start their services.

The Cabinet has fixed Rs 14,000 crore for 4 blocks of pan-India spectrum in the 1800 Mhz band.

Existing players, or companies whose licences were unaffected by the apex court judgement will be allowed to bid maximum of 2 blocks in 1800 Mhz band.

S C Khanna, former secretary general of Association of Unified Telecom Service Providers of India (AUSPI), said, "There is no business case for companies to participate in auction with such a high reserve price."

He added after paying such a high price for spectrum, the companies can be able to offer services with tariffs ranging between Rs 1 -1.50 paise a minute while the existing players are offering tariffs of 40 paise a minute.

"The people who have not participated are wise people because there is no business case in this auction," he added.