Idea offers Rs 1,650 cr for additional spectrum

Wednesday, December 12, 2007

A day after Bharti Airtel raised the stakes in the battle for spectrum by offering to pay Rs 2,650 crore for 4.4 MHz of pan-India GSM spectrum, Idea Cellular also joined the fray by offering to pay Rs 1,650 crore for the same amount of spectrum across the country.

Idea Cellular’s managing director Sanjeev Aga, in a communication to Department of Telecom secretary D S Mathur, said the company was willing to match RCOM’s payment of 1,650 crore, while adding that Idea would to pay a higher amount in the event of spectrum being auctioned.

Mr Aga said that the company was forced to take this step because the DoT had failed to act on its applications for licences and spectrum since 2006, but was taking steps to award the same to recent applicants. Demanding parity with RCOM, Mr Aga’s communication added that Idea, too, was ready to pay Rs 1,650 crore for a second licence as was done by Reliance.

The move is bound to increase the pressure on DoT as it must now explain why it wants to continue with the existing policy of allocating spectrum for free (based on the telco’s subscriber numbers) even as existing operators are willing to cough up huge amounts for radio frequencies. Besides, as reported earlier, the finance ministry also favours an auction of 2G spectrum.

Reliance Communications, however, wasted no time in slamming Bharti over its offer to pay for additional spectrum. “Bharti’s offer of Rs 2,650 crore for pan-India GSM start up spectrum is misleading and self contradictory. The existing guidelines don’t permit second licence for running the same service using the same technology in the same service area,” the company said in its communication to the DoT, while adding: “Bharti is most welcome to commence CDMA services with use of alternate technology and pay the prescribed fee of Rs 1,650 crore for nation-wide CDMA operations.” At the same time, RCOM also said that the GSM operators association had earlier advocated that said that that the government can’t adopt auction for 2G spectrum.

When asked on RCOM’s communication, the Bharti spokesperson said: “Bharti would not like to respond to these blatantly incorrect and grossly wrong statements. As a young entrepreneurial company, from the beginning, we have partnered in the building of this vital infrastructure sector. It is time for large companies in India to recognise that young entrepreneurs have an equal right to succeed and build business that positively impact the people of India. It is unfortunate that our detractors are taking regulatory route to take an unfair advantage instead of making their mark in the market, the true battleground.” Bharti’s subscriber base exceeds RCOM’s by over 12 million.

Meanwhile, the Tatas, who also have applied for GSM spectrum, joined the war of words and said that Bharti’s offer was ‘anti-competitive’ and only confirmed that the Sunil Mittal-led company was hoarding surplus airwaves.

In fact, agency reports quoted the Tatas’ spokesperson as saying: “When Tatas offered to pay for 3G spectrum Sunil Mittal said the Prime Minister’s Relief Fund was always available to anyone who wanted to donate money. The offer of Bharti now confirms that they have been hoarding spectrum beyond contracted amount and because of their guilt conscious, the said amount is now being offered as pittance against the gains that they make every year.”