NEW DELHI--India begins another round of telecommunications
airwaves auctions Monday, hoping to spur investment by phone
companies and raise billions of dollars for the government.
This will be India's third attempt to auction spectrum in the
past 18 months. Two earlier rounds left a large part of the
airwaves unsold as operators refused to bid, citing high fees and
tough restrictions.
India's telecom sector, at the center of New Delhi's
liberalization policies since the 1990s, has lost its shine in
recent years as regulatory hurdles, profit-crushing competition and
corruption allegations have weighed on optimism about the industry
which had brought hundreds of millions of Indians their first phone
connections in the past decade.
From Monday, New Delhi will conduct two sets of auctions, one
for nationwide use of the 1800 MHz frequency and another to offer
cellular-phone services using the 900 MHz frequency in the
megacities of Mumbai, Delhi and Kolkata.
Among those expected to bid are British telecommunications
company Vodafone Group PLC, and Norway's Telenor ASA and Indian oil
and gas company Reliance Industries Ltd., as well as India's Bharti
Airtel Ltd.
The auctions are crucial for Bharti and Vodafone India Ltd.,
whose bandwidth-usage rights are set to expire in Delhi, Mumbai and
Kolkata. The companies will have to bid successfully in the
auctions to continue operations. The rights to use bandwidth will
last for the next 20 years.
Idea Cellular Ltd. and Reliance Communications Ltd., India's
third- and fourth-largest telecom companies by number of users, are
also expected to bid.
The auctions have been taking place since the Supreme Court
canceled licenses of several telecom companies after ruling that
the first-come first-serve policy used to allot their licenses in
2008 was illegal and resulted in large losses of potential revenue
to the government.
Of the 400 billion rupees ($6.38 billion) the government had
hoped to raise through the last two auctions, it was only able to
raise 130 billion rupees due to a lack of bidders.
Since then, New Delhi has cut bandwidth prices, eased rules for
trading and sharing of bandwidth and lowered spectrum-usage charges
to attract more bidders.
India hopes to raise at least 110 billion rupees in much needed
nontax revenue through the latest auction. It will be offering
airwaves valued at 491.43 billion rupees.
Telecom executives wouldn't predict whether the latest auction
would be successful as there are uncertainties about the market
that may continue to keep bidders away despite the lowering of some
fees and regulations.
Trade lobby Cellular Operators Association of India said the
government hasn't gone far enough to ease concerns, which will
dissuade operators from bidding more for airwaves.
"It will affect the potential investments to the sector, which
is already facing hurdles presently," said Rajan S. Mathews,
director-general of COAI.
Write to R. Jai Krishna at krishna.jai@wsj.com
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