India aims to finalize spectrum policy by July
Department of Telecom revises controversial proposals for reauction of GSM licences, but pricing is still high
Published: 28 May, 2012
India's Department of Telecom (DoT) aims to get government approval for a proposed national policy by the end of July, and to address the tortured issue of spectrum pricing once and for all.
According to a document posted on the department's web site, it expects to issue spectrum auction rules by June 28 and get government approval for proposals on telecoms M&A by June 30. The long-winded disputes over these issues have held back progress in India's wireless sector for the past year or more, worsened by a corruption scandal which led the Supreme Court to cancel 122 GSM licences issued in 2008. Those frequencies will be reauctioned before August 31.
The Telecoms Commission recently that at least 10MHz of spectrum should be made available in each service area, twice the 5MHz recommended by regulator TRAI, and divided into eight slots of 1.25MHz. Existing operators will be able to buy two slots per region, and new entrants up to four slots. Additional spectrum could be made available if needed, the Commission said.
It is not clear whether the new proposals will also lead to lower reserve prices. TRAI has controversially recommended a base price for a nationwide licence of INR36.22bn ($689.6m) - over 10 times higher than the reserves set in the 2008 sale of the same airwaves. A report published last week by the Cellular Operator Association of India (COAI) said that local operators could take on an extra $50bn in debt over the next five years if the auctions go ahead at the those prices.
India is in desperate need of more wireless capacity but operators are reluctant to invest huge sums in 2G spectrum because the returns are uncertain - there is intense competition among carriers and very low ARPUs. The only cellcos which are achieving higher rates are those with 3G licences.
The new plan also aims to get government approval to revive ailing state-run telecoms equipment maker ITI by the end of January 2013. The administration has considered various routes for ITI, including selling stakes to foreign joint venture partners, and imposing quotas for locally sourced equipment on cellcos.
Also in India, Bharti Airtel has acquired 49% of Qualcomm's TD-LTE joint venture, and plans to take over full ownership by the end of 2014. The largest Indian cellco will pay $165m for its initial stake, and will take on the shares currently held by Qualcomm's initial local partners, Global Holding and Tulip Telecom, with the remaining 23% covered by the issue of fresh equity in the Qualcomm businesses. These hold BWA licences in four operating regions. The US chip vendor acquired these at auction mainly to ensure that TD-LTE had a foothold in India, where the rival TDD technology, WiMAX, was expected to sweep the board. Now, however, TD-LTE is dominant and Qualcomm wants to make its exit. It was delayed in making that move by a two-year legal battle to get its licences confirmed by the government.
The US firm's CEO, Paul Jacobs, said the Bharti deal fulfilled a key objective of the company's Indian adventure, "to include a strong partner in the Indian venture with the scale, experience and resources to deploy TD-LTE networks." Bharti was the first Indian operator to roll out TD-LTE, with a launch in its own spectrum in the Kolkata circle last month. The only operator to hold BWA licences in all 22 circles is Reliance Infotel, which has still to launch networks.