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Eight operators to bid in Indian auctions as SSTL bows out

Next month’s Indian spectrum auctions have attracted 8 bidders.

The participants will be Aircel, Bharti Airtel, Idea Cellular, Reliance Jio Infocomm, Reliance Communications (RCom), Tata Teleservices, Uninor and Vodafone. The Indian government aims to raise at least INR800 billion ($12.8 billion) in revenue through the auctions.

Scheduled for March 4th, the auctions will cover 2G and 3G spectrum in the 800MHz, 900MHz, 1.8GHz and 2.1GHz bands. Idea, RCom and Vodafone are under particular pressure as their licences for 900MHz are due to expire in some of India’s telecom circles this year.

The DoT has come under fire for ignoring the base price recommendations of regulator TRAI, while also making a fairly small amount of spectrum available for auction. In particular, the base price for 3G spectrum exceeds TRAI’s recommendations by 36%.

SSTL (Sistema Shyam TeleServices Ltd) has refused to participate in next month’s spectrum auction due to the high reserve prices of the 800MHz band. At 17% higher than TRAI’s recommendation, the base price is now higher than it was in 2012, when the CDMA spectrum failed to attract any bidders.

In a statement, SSTL said that it has “consistently maintained that the pricing of 800MHz spectrum at INR36.46 billion ($696 million) per MHz is way out of line and does not merit a strong business case for buying additional spectrum”.

SSTL, which operates as MTS, has a market share of less than 1%. It has objected to the reserve prices, claiming that they don’t accurately reflect the developing ecosystem of the 800MHz band.

In addition, the operator has raised an issue with the TDSAT (Telecom Disputes Settlement and Appellate Board), claiming that the liberalised spectrum that it won at auction in 2013 should be rearranged by the DoT.

“Since SSTL was the sole bidder during the auction and there is no other successful operator for rearrangement of frequencies, it is incumbent upon DoT to rearrange/reassign the frequency to make the spectrum allotted to SSTL contiguous”, said the operator in a statement.

Under the terms of the auction, rearranging liberalised spectrum via agreements with other operators should not incur any additional charges. SSTL has argued that non-contiguous allocation of spectrum reduces its efficiency, thereby discouraging adoption of newer technologies.