New Delhi: Amendments made by India’s department of telecommunications, or DoT, on Thursday to guidelines on companies that can offer so-called third generation, or 3G, mobile-phone services will still not make it easy for foreign firms to enter the market, analysts and experts say.
New entrants would have to pay an additional Rs1,651 crore to acquire a basic license in addition to the money they bid for spectrum, or airwaves, needed to offer 3G services such as Internet browsing, video calls and high-speed data transfer.
In addition to firms licensed to offer mobile-phone services, only those non-licensees who have the experience of running such as a service will be allowed to bid for spectrum, Newcomers would need to provide an undertaking that they would apply for a so-called unified access services, or UAS, license, according to the amended guidelines.
Entry into the market would be an expensive proposition for aspirants, said Harit Shah, analyst at Angel Broking Ltd.
“The spectrum is not enough for the foreign players (telecom firms) to offer standalone 3G services,” said Shah. “Acquiring an existing 2G player will be better for foreign companies as they will be in a better position to offer both 2G and 3G services.”
The Rs1,651 crore required for a new license “will be pretty expensive given the current valuations of the current players,” he added.
B.K. Syngal, senior principal at Dua Consulting Pvt Ltd, said: “Since the spectrum is being auctioned, the license should not come with such high costs and uncertainties.”
On merger and acquisition guidelines, DoT clarified that the policy announced in April this year would be applicable for a merger between two UAS license-holders only in a service area.
This, a telecom expert said, is only a “cosmetic” changes, especially for the foreign phone firms that want to invest in India.
“The government has not done enough. It does not address serious concerns, as foreign firms will anyway have to take a 2G licence but without 2G spectrum,” said Alok Shende, analyst at Acceindia Consulting. “Even those companies who want to come into India are sceptical.”
DoT also made a change to guidelines relating to revenue sharing front. The licensee should pay an annual spectrum charge of 1% on the incremental revenue due to 3G services after a period of one year. “This method of calculation shall be notified separately,” it said.