ENS ECONOMIC BUREAU
Spectrum
woes ‘New norms would destabilise the sector’
New Delhi, November 1: Even as the GSM and CDMA players have escalated war of words over TEC recommendations on spectrum, the department of telecommunications (DoT) is set to accept the report, proposing stringent norms, for allotting additional spectrum to the existing telecom operators. This would be a major setback for the existing GSM players like Bharti Airtel, Vodafone and Idea, Reliance Communications would be the greatest beneficiary as it has been allowed to offer GSM services.
DoT will file an affidavit over findings of TEC report to TDSAT, said the communications and IT minister A Raja. However, according to sources DoT has already given its in-principle nod to the report. TEC has recommended up to eight times increase in subscriber base for GSM operators to become eligible for additional spectrum. For instance, in Delhi with an initial spectrum of 4.4 MHz, an operator can accommodate six lakh subscribers. According to the proposal, to be eligible for next tranche of 6.2 MHz spectrum, the operator’s subscriber base should be 19 lakh and to avail 8 MHz spectrum, it should be at least 34 lakh.
Sunil Mittal, chairman of Bharti Airtel has officially joined the war of words saying that the new norms would destabilise the sector. “I am writing this letter to seek your urgent intervention in a matter that is causing extreme anguish to GSM mobile operators. There have been a number of developments in recent months which could once again destabilise this vital infrastructure sector,” said Mittal in a letter D S Mathur, secretary, DoT. He also said the hurried exercise at TEC was a sad commentary on how international and time-tested norms for spectrum allocation were being ignored. “In fact, if one was to assume the TEC recommendations have any weight, then the start up spectrum for new operators should be a fraction of the proposed 4.4 MHz, given that Bharti is serving 56 million customers with a spectrum of less than 8 Mhz,”he added.
On the other hand, association of unified access service providers of India representing CDMA players has welcomed TEC recommendations.
Source The Indian Express
2 Nov 2007, 0001 hrs IST,Shalini Singh,TNN
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NEW DELHI: The Telecom Engineering Centre’s (TEC) report released on Wednesday, which substantially tightened the subscriber-linked criteria for spectrum allocation, has been accepted by DoT. Since the price of spectrum is directly linked to spectrum efficiency, the move’s most significant impact is to instantly raise the value of spectrum.
The hardest hit are Bharti, Vodafone, Idea and Spice. The new norms are expected to play havoc with the valuations of these multi-billion dollar operators, also seriously damaging future investor confidence. The report, which has the GSM industry reeling in shock, has tightened subscriber thresholds over and above those recommended by Trai in its report of August 7. Trai had already tightened subscriber thresholds two to four times and COAI, an association of GSM operators, challenged this in TDSAT.
The categories that are worst hit are A, B and C as they move from 6.2 MHz to 8 MHz and then from 8 MHz to 10 MHz.
This serves to push up the value of the entry fee of Rs 1,651.57 crore fixed for UAS licence with 6.2 MHz of spectrum to at least Rs 5,000 to Rs 7,000 crore. This value is despite the increased capex that the companies may have to deploy for extracting maximum efficiency from spectrum.
Under the circumstances, both the Trai and TEC reports fly in the face of the telecom ministry’s attempt to deny the exchequer of legitimate revenues by shunning spectrum auctions and pushing through the existing first-come-first-served allocation policy.
In fact, going by the 2001 parameters, the price of licence with the initial spectrum could be higher still. This is because the initial allocation of 4.4 MHz going up to 6.2 MHz guarantees a clear line of sight for spectrum, the lifeline for any mobile venture.
To illustrate: should the telecom ministry, which expects to get 20 MHz of fresh 2G spectrum from the defence services, auction it in four tranches, it could easily attract a value upwards of Rs 24,000 crore compared with Rs 6,604 crore (the current entry fee of Rs 1,651 crore x 4).
COAI has taken an aggressive stance. Its DG, T V Ramachandran said, "the undue haste, lack of transparency and departure from due process raises serious questions about the objective of the entire exercise". Accusing the ministry of vendetta, the COAI says, "the general feeling in the industry is that it is being punished for approaching TDSAT on the issue".
Telecom News dated 02-11-2007