Home / Home-page / Govt may auction new GSM licences

India may junk a queue-based system for new telecom licences and instead opt for a limited auction among firms that have applied to be allowed to operate telecom services in the country, a top official in the department of telecommunications (DoT) said on Friday, a day after it received the third such application in less than two weeks.

The DoT official, who declined to be identified, said the government expects to have significant spectrum available after India’s defence forces vacate 20MHz of wireless spectrum in favour of mobile phone service firms later this year and if the current subscriber-linked allocation formula is tightened, as recommended last week by the country’s telecom regulator.

The leftover spectrum will then be allocated to the GSM-licence applicants through an auction within the group.

“It may not be an open auction where anybody can come in and bid," said the DoT official, when asked about the government’s thinking on the Telecom Regulatory Authority of India (Trai) suggestion that the government consider an auction and, until such time it finalizes the process, tighten allocation criteria for existing players. “Since the question will be one of allocating a finite resource among a large number of applicants, an auction among those in the queue for licences is likely to be the preferred solution," the official said, adding that no final decision has been taken so far.

The last two weeks have se-en the queue of licence applicants grow longer as firms, including those with no telecom background, applied for licences. While realty firm Parsvnath Developers Ltd and Oswal Chemicals & Fertilizers Ltd made licence applications last week, Mumbai’s BPL Mobile Communications Ltd had applied on Thursday. “We are an existing player and not a new player," said S. Subramaniam, its CEO, hoping that “that (status) is considered by DoT when spectrum is distributed."

Global operators AT&T Inc. and Deutsche Telekom AG are interested in bidding for new GSM licences but have not put in licence applications, pending clarity in government policy. If the auction is restricted to existing applicants without allowing new applications to be filed once (and if) the government legislates this rule, global players will have no option but to buy out licensees.

Parsvnath said in Hyderabad on Thursday that it was talking to foreign players to partner it in its cellular unit. “We are not averse to the idea of retaining a minority stake and offer majority holding to the foreign partner if we think it makes business sense," said managing director Sanjeev Jain.

The move to restrict the auction of licences to existing applicants is likely to be challenged as GSM aspirants may take the government to court. It may irk smaller GSM firms, who applied for new licences months ago too; bigger players may be indifferent as they are eligible to receive the right to spectrum under the subscriber-linked formula. T.V. Ramachandran, director general, Cellular Operators Association of India, declined comment.

(Abhineet Kumar in Mumbai and C.R. Sukumar in Hyderabad contributed to this story.)

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