New Delhi: The Supreme Court on Friday ruled that only those phone companies that successfully bid for spectrum in the November auction, from among those that had their licences cancelled last year, can continue to operate after paying the market price for the frequencies that they are using.
“Operators that did not bid for spectrum or were unsuccessful will have to cease operations immediately,” said a senior executive with one of the companies that lost its licences.
The court also directed the government to auction all the spectrum freed up after the cancellation of the licences, the executive said on condition of anonymity. The court was offering a clarification to its verdict of last year scrapping the licences.
Sistema Shyam TeleServices Ltd (SSTL) is the worst hit of those that had their licences cancelled as it didn’t participate in the November auction. The company has, however, filed a petition seeking more time as it plans to take part in auctions in March.
“The telecom companies which have been unsuccessful in the bidding and those after the cancellation of the licences did not participate in the fresh auction are directed to cease from continuing from operation forthwith and the successful bidders will immediately start in their respective circles,” PTI cited the court as saying.
A bench comprising justices G.S. Singhvi and K.S. Radhakrishnan directed that those telcos that were allowed to continue operations after the scrapping of their licences will have to pay the reserve price fixed for the licences in the first round of the auction held in November.
The Supreme Court had, on 2 February 2012, cancelled 122 telecom licences and spectrum allocated to nine companies in January 2008, saying the process of allocation was flawed. The court further ordered that the spectrum be auctioned and gave the affected operators time till the conclusion of the auction to operate.
On Thursday, the apex court dismissed a curative petition filed by Russian conglomerate Sistema’s Indian unit challenging the February 2012 cancellation verdict. The court also rejected a similar petition by Videocon Telecommunications Ltd.
SSTL said the 2012 verdict had been unfair. “The company believes that it has been unfairly penalized in the 2 February order by the honourable Supreme Court,” it said in a release, reacting to the dismissal of the curative petition. “While SSTL remains committed to its operations, it will be up to the shareholders to decide the forward strategy of the company.”
The companies had filed separate curative petitions with the Supreme Court after their earlier appeals last year seeking a review of the licence cancellation order were rejected.
SSTL filed a petition on Friday asking that it be allowed time until March to bid in the spectrum auction to be held at the time. The court has said it will respond separately to this petition.
Uninor, also affected by the Supreme Court verdict, said in a statement that this order would have no impact on its operations and services in the six circles of Uttar Pradesh (East), Uttar Pradesh (West), Bihar and Jharkhand, Andhra Pradesh, Maharashtra and Goa, and Gujarat, since the Telenor Group has already secured fresh spectrum for 20 years in these (at the November auction). “Uninor services in these six circles will continue uninterrupted. For the remaining details, we will only be able to comment once the court order becomes available and has been studied,” the statement said.
The department of telecommunications (DoT) has said that it will hold an auction for spectrum in the 900 megahertz (MHz), 1800MHz and 800MHz bands in March.
The apex court on Friday, however, also said that the telcos can challenge the auction for spectrum in the 900MHz band.
Senior DoT officials said the ministry will study the order and decide what is to be done next. “The quantum of spectrum will likely be increased to all the spectrum that was released due to the licence cancellations. There is still time,” one of the officials said, requesting anonymity.
Analysts, however, had mixed reactions to the order.
“They haven’t said that you cannot auction the spectrum in the 900MHz band, but have only clarified that it was not part of the earlier order to auction spectrum. This could lead to the industry bodies and operators approaching the courts in a bid to ensure they don’t lose the spectrum. But then again, there was nothing stopping them from going to the courts earlier,” said a senior Mumbai-based telecom analyst with a multinational investment banking firm requesting anonymity.
“The order on cancelling the licences helps the government in a way that there is more of a chance that the 800MHz spectrum gets auctioned unlike last time,” he added.
The November auction saw the government able to sell spectrum only in the 1800MHz band and make around Rs.10,000 crore, one-third of the estimated Rs.30,000 crore. The auction was considered a failure, especially after Tata Teleservices Ltd and Videocon withdrew from the auction in the 800MHz band, causing the sale of the CDMA frequencies to be cancelled.
PTI contributed to this story.