India's TRAI to set 2G auction terms

Dylan Bushell-Embling
06 Feb 2012
00:00
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Daily News

After India's Supreme Court ruled to revoke 122 2G licenses last week, the government wasted no time in setting the stage for an auction to reallocate the licenses.

The telcom ministry has asked telecom regulator TRAI to draw up pricing and policy terms for a 2G auction, Times of Indiareported.

TRAI meanwhile has called for comment from stakeholders as a prelude for drawing up the auction terms, DNA India said.

The government reportedly wants to introduce uniform terms for all of the telecom licenses, including durations.

Due to the haphazard way the licenses were awarded in 2008, under former telecom minister Andimuthu Raja, the terms for the licenses are rather disparate.

The Supreme Court last week ruled to revoke all of the licenses after finding that the terms unfairly benefited the operators involved.

But in setting new auction and license terms, TRAI faces a number of thorny questions, one being the reserve price.

If the price is too high, it may make the process commercially unviable, but if it is too low, it could prompt a repeat of one of the main quarrels with the 2008 allocation – that the low prices robbed the government of up to $39 billion in revenue.

As the Deccan Heraldpoints out, it is also uncertain which players will participate.

New players Uninor and Sistema Shayam and incumbents Idea and Tata - four of the eight companies which lost licenses in the decision - are expected to bid. But the others, new entrants which have invested much less in rolling out services, may not be as eager.

And the remaining incumbents may not be interested, considering they just spent large sums acquiring 3G and BWA spectrum last year.

The affected operators, and Uninor in particular, are also expected to seek to appeal the court's decision.

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