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Vodafone, Airtel challenge govt plan to auction 900MHz radio waves

Firms oppose the auction as applications for extension of licences is still pending with DoT
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First Published: Wed, Feb 20 2013. 11 01 PM IST
In December, Vodafone had sought an extension of its licences for the Delhi, Mumbai and Kolkata service areas, which are coming up for renewal in November 2014. Photo: Hemant Mishra/Mint
In December, Vodafone had sought an extension of its licences for the Delhi, Mumbai and Kolkata service areas, which are coming up for renewal in November 2014. Photo: Hemant Mishra/Mint
Updated: Thu, Feb 21 2013. 01 01 AM IST
New Delhi: Bharti Airtel Ltd and Vodafone India Ltd challenged the government’s plan to auction spectrum in the 900 megahertz (MHz) band in the Delhi high court on Wednesday.
They opposed the plan to auction the radio waves on the grounds that their applications for extension of licences is still pending with the department of telecommunications (DoT).
“We want the auction process to proceed and hope that the government will take a considerate view in this matter, and our contractual right for extension of licence along with the spectrum as per guidelines is fully protected,” said a senior Bharti Airtel official who didn’t want to be named.
“Our decision to undertake this legal recourse is only aimed at protecting our legal and contractual right with regard to 900MHz spectrum and ensuring business continuity,” the official said.
Vodafone said in a statement that, “It is entitled to a fair and reasonable extension of its licence as per mutually agreeable terms. Both the policy and licence provide for continuity, and this action of DoT to arbitrarily withdraw the 900MHz spectrum is not only against the provisions of policy and licence but also disruptive and against public interest.”
In December, Vodafone sought an extension of its licences for the Delhi, Mumbai and Kolkata service areas, which are coming up for renewal in November 2014.
As per clause 4.1 of the unified access service licence (UASL, or telecom licence), telecom operators are eligible for an extension, on application in year 19 of the licence, of 10 years at a time.
The government has, however, changed the terms of the licences, making it a renewal rather than an extension, and delinking spectrum from the licences.
This means that Vodafone has to successfully bid for spectrum in the auction that is expected to take place in March to continue to be able to offer services in Delhi, Mumbai and Kolkata, where its licences are up for renewal or extension in November 2014.
The government, through the telecommunication department, expects to auction this 900MHz spectrum as well as 1,800MHz and 800MHz spectrum in March.
Operators that have licences expiring next year and were allotted the 900MHz spectrum, will be allowed to retain 2.5MHz in each circle in the same band even after the expiry of their licences, having paid a market-determined price.
Vodafone has around 24MHz spectrum in the 900MHz band in all the three circles for which it has sought a licence extension.
The 900MHz spectrum forms the foundation of the network that has been built up over the last 18 years, Vodafone said.
Vodafone is providing services to more than 18.7 million subscribers using the spectrum.
The company said it is a serious and a committed operator in the Indian market, and has invested thousands of crores in setting up its network.
The company said DoT’s withdrawal of the 900MHz spectrum was not only against the provisions of the licence policy but also disruptive and against public interest.
The government is expecting to raise about Rs.30,000 crore from the second round of the 1,800 MHz and 900 MHz band spectrum auction that is expected to be held in this financial year.
The exact date for the auction to sell 900 MHz spectrum in Delhi, Mumbai and Kolkata has not been declared.
On Friday, the Supreme Court had clarified that the 900MHz auction was a separate issue from the 2 February 2012 verdict regarding the 1,800MHz spectrum, and that the companies were free to approach the courts on the 900MHz auction.
Earlier this year, the government had clarified that the existing telecom licence validity could be extended as per the provisions of existing licencing regime, and not terms of the original licence.
The cost of spectrum would be based on the market-determined price.
The government’s main goal from auctioning of spectrum is to find the market price of the spectrum; however, many analysts have expressed their doubts on the ability of the sale to do so because of the high reserve price set by the government.
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First Published: Wed, Feb 20 2013. 11 01 PM IST
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