Bharti blames spectrum shortage, auction format for high 3G prices

Bharti blames spectrum shortage, auction format for high 3G prices

3G auction: Indian telecom on new growth trajectory

Bharti blames spectrum shortage, auction format for high 3G prices

Among seven telecom companies that qualified for the bid seven players bagged 3G licence in some circle or the other (see tables). Bharti, the highest bidder will pay Rs 12,295 crore for 13 circles.

But Bharti complained that the auction format and severe shortage drove up prices beyond reasonable levels. The government had fixed a reserve price of Rs 3,500 crore for 3G spectrum and had originally estimated to raise Rs 35,000 crore from the sale. “We would like to point out that the auction format and severe spectrum shortage, along with ensuing policy uncertainty, drove the prices beyond reasonable levels. As a result, we could not achieve our objective of pan-India 3G footprint in this round,” Bharti said.
The second largest telecom player Vodafone Essar has secured 3G spectrum in 9 circles by offering to pay Rs 11,617 crore. These circles cover over 60 per cent of company’s current customer base, Vodafone said.

Vodafone Essar CEO & Managing Director Marten Pieters said: “We have secured a critical strategic footprint across the country, particularly in markets where we expect main demand for 3G services to be in the next few years. We are excited to be able to offer 3G services to our customers and aim to launch the services before the end of the year.”

The company expects a strong uptake for 3G in these markets particularly among the higher value customers, which is a growing segment owing to rising affluence and increasing urban population.

Shadow over 2G sale

In the face of distinct success of third generation (3G) spectrum auction, the controversy ridden telecom ministry may face blistering criticism for not auctioning the 2G spectrum in 2008 on similar line.

The ministry is currently in the eye of storm in the wake of allegations from various quarters that the government incurred massive revenue losses for not adopting transparent system for sale of 2G spectrum.

In 2008, the ministry allocated spectrum on first-come first-serve basis instead of auctioning.  There is a widespread feeling that government could have mopped up much more revenue from 2G auctions.

Telecom Minister A Raja who expressed happiness over successful completion of the auction of 3G spectrum, has been defending his decision of allocation of 2G spectrum on first come first basis.

 The 2G spectrum licences which were sold at throwaway prices of Rs 1,651 crore to eight operators is now being investigated by Central Bureau of Investigation, Central Vigilance Commission and Directorate of Enforcement.  Alleging that allocation of 2G had caused the exchequer revenue loss of Rs 60,000 crore, the opposition parties have been demanding Raja’s removal.