Telecom Lead India: The demand for “free” 2G spectrum is continuing to haunt us. When the Indian government put a price on the spectrum, the government could mop up only Rs 9,400 crore. By March 2013, the mobile industry will prove that even 30 percent discount is not enough.
The February 2012 order by the Supreme Court affected several mobile operators, telecom equipment makers, tens of thousands of employees, mobile phone players, analysts, forecasts, etc.
Mobile industry criticized both the government — for not creating the right market condition by taking appropriate decisions — and apex court — for ordering spectrum auction without studying the negative implications.
The auction did not fetch enough results though the Reserve Bank of India (RBI) has given permission to banks to lend telecom companies for the spectrum auction. RBI defined some riders for lending such as mortgaging the spectrum to the lenders.
Telecom ministry headed by Kapil Sibal expects to mop up huge funds from unsold spectrum in Delhi, Mumbai, Rajasthan and Karnataka.
The 2G spectrum sale issue is unlikely to settle down soon. After spending around Rs 2,031 crore for 2G spectrum, Idea Cellular wants to gain from any cut in spectrum fee for unsold spectrum that will be sold before March 2013.
If the government accepts Idea Cellular’s plea, it will further bring down the government’s mobilized amount. But it will be good for the telecom sector. Most of the analysts have already said the flopped telecom spectrum auction was for good for the sector.
Interestingly, Supreme Court refused to hear a number of petitions from several mobile operators on the 2G issue.
Telecom industry analysts say the 1800 MHz spectrum auctions, on expected lines, saw limited participation primarily only from the ‘pushed-into-a-corner’ operators, whose licenses were cancelled by the SC February 2012 judgment and who had little choice but to participate if they intended to continue operating.
IN A RECENT ARTICLE, TELECOM LEAD urged India Government to refund Capex spent of around $6.5 billion to Videocon, Uninor, S Tel, Etisalat, Loop, MTS and Tata Teleservices (TTSL).
The refund of their investment in telecom network is important as the government is currently planning to refund spectrum fee paid in 2008 to companies who have won in the 2012 auction. What about other mobile operators and their investments in India.
S Tel, Etisalat and Loop Telecom have already discontinued their telecom operations.
The Supreme Court order prompted MTS India and Telenor to take decisive steps for survival in India, the second largest mobile phone market in the world. For instance, Sistema Shyam Teleservices is working on new operational models and other plans to ensure MTS brand’s continuity in Indian mobile market.
Meanwhile, operational strategies of Uninor post 2012 spectrum auction are evolving around profitability of six circles.
Government’s strategies to engage Airtel and Vodafone officials to ascertain spectrum release during the NDA regime is creating more sparks in the industry.
Note: TelecomLead.com’s editors have selected this news based on the impact it created on the industry and the sector.