India 2G price controversy still raging

Caroline Gabriel/Wireless Watch
13 Aug 2012

However, at least the final decision is at the low end of the range of 140 billion to 160 billion rupees recommended by a group of ministers last month – a group which itself cut the 180 billion sensationally suggested by regulator TRAI, which provoked a storm of protest from operators. The base price for CDMA spectrum in 800-MHz is set slightly higher at 182 billion rupees.

The new prices are still many times higher than those charged when the GSM spectrum was originally sold in a “first come, first served” auction in 2008. Those licences were cancelled by the Supreme Court in February, amid accusations of a corrupt and unconstitutional process which prompted the resignation of the Telecoms Minister of the time.

The current minister, Kapil Sibal, said the government has allowed “liberal payment norms” for the auction to ensure that either local or foreign players can participate. Carriers can pay licence fees in instalments and the spectrum usage charge will be kept at between 3% and 8% of operator revenues. The auctions are due to commence on August 31, though many expect this Supreme Court deadline to slip.

The carriers will now have to decide whether to take part. Some will be rebidding for licences they previously bought in 2008 – and a few of those have even launched commercial services. One of those was Telenor's joint venture Uninor.

A Telenor spokesperson told Reuters: “We register that the auction starting price is lower than the recommended amount, but we need to look very carefully at the details of this new recommendation and make a proper decision based on facts before we decide.”

Others were more outspoken. Idea Cellular‟s managing director Himanshu Kapania said the reserve price “does not present a viable business case”. Telenor has already written down its remaining fixed and intangible assets in India amounting to $680 million in value, and is looking to break the ties with JV partner Unitech. The proposed auction of the JV's assets was initially blocked, then green-lighted, and has now stalled again. Telenor wants to seek buyers for its 67% stake despite objections from Unitech.

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