A variety of companies, including AT&T Inc., real estate company Omaxe Ltd, cable operator Hinduja TMT Ltd and Tulip IT Services Ltd, have applied for licences to offer telecom services in India, the world’s fastest growing wireless market.
AT&T, the biggest US phone company, sought nationwide licences with Mahindra Telecommunications Pvt. Ltd ahead of Monday’s deadline for applications. The two have a 74:26 joint venture for long distance and telecom network services in India.
Monday’s applicants join more than 10 companies including the Videocon group, which has interests in consumer electronics and oil exploration, and Indiabulls Real Estate Ltd in seeking to offer wireless and fixed-line services in a market where less than one in five people own a mobile phone.
“Barely three out of this entire bandwagon are going to be selected, because spectrum is a scarce commodity in India,” said K.R. Choksey Shares & Securities’ chief executive Deven Choksey. Spectrum is allotted to companies on a first-come, first-served basis under current rules.
Record growth of mobile-phone users in India, which added more than 8.3 million new customers in August, has crowded wireless spectrum in urban areas. The shortage has crimped expansion plans for carriers such as Idea Cellular Ltd. A plan by the defence ministry, which controls a portion of the airwaves, to release more spectrum has been delayed at least three times since April.
India charges a one-time entry fee of Rs1,660 crore for a nationwide licence to offer wireless and fixed-line services and between 2% and 6% of an operator’s revenues for spectrum.
Other requirements include a net worth of at least Rs1,380 crore for nationwide licences and bank guarantees of up to Rs882 crore, according to government rules.
Pankaj Mishra of Mint contributed to this story.