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DoT eases merger rule for foreign telcos

DoT eases merger rule for foreign telcos
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First Published: Wed, Aug 27 2008. 12 34 AM IST
Updated: Wed, Aug 27 2008. 12 34 AM IST
New Delhi: In a move that will allow acquisitive foreign telecom firms to enter the country’s fast-growing telecom market, the department of telecommunications, or DoT, says successful bidders for third generation (3G) services will be allowed to buy out an existing licence holder without waiting for three years, the earlier lock-in period before a shareholder was allowed to sell.
This decision, taken by the telecom commission, the apex body at DoT, on 21 August, will allow winning bidders in the 3G licence auction to buy into firms in India offering voice-dominated mobile phone services, also called second generation or 2G services, a top DoT official said on Tuesday.
Phone firms such as AT&T Inc., Deutsche Telekom AG, Emirates Telecommunications Corp. (Etisalat), Mobile Telecommunications Co. KSC (Zain), and NTT DoCoMo Inc. have shown interest in India, the world’s second largest telecom market by customers.
DoT secretary Siddhartha Behura said by this rule change, 3G bidders wouldn’t have to pay an additional Rs1,651 crore—the amount for what is called an unified access service licence or UASL—without a chance to move into 2G services through a merger with a licence holder. Firms such as Datacom Solutions Ltd, Unitech Wireless Ltd and Swan Telecom Ltd have 2G licences but are yet to start service.
“This will give a level playing field,” Behura said. Telecom firms have to sign a UASL to be able to offer phone services, even if it is just 3G-based.
Behura said the telecom commission has also decided to auction 800MHz used by telecom firms using CDMA (short for code division multiple access) technology for 3G services. Earlier, DoT had said the 3G licence in this band would be awarded to the firm that had the highest number of subscribers if it marched the highest bid for GSM-based 3G services. The Economic Times reported this change first on Tuesday saying “this would deny Reliance Communications automatic entry into CDMA 3G on the strength of its subscriber base”.
Separately, DoT has revised the deadline for appointing an agency to conduct an electronic auction for 3G licences. A pre-bid conference seeking interest from agencies, which was to start Wednesday, will now be held on 8 September. Submission of financial bids has been postponed to 22 September from 3 September, DoT said in a statement.
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First Published: Wed, Aug 27 2008. 12 34 AM IST