Indian Telecom Industry: New Foreign Players Kept Themselves Out From 2G Auction Pre-Bid Conference

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Yesterday, no any new foreign player participated in first pre-bid conference hosted by department of telecommunication in India related to 2G auction. As per the previous norm, the foreign vendors had to form a joint venture with an Indian partner prior to participate in the bid, but this time, they didn’t need to form any venture to participate in the 2G bid. However, the firms are allowed to bid for spectrum, but they will have to form a joint venture before participating in the auction.

Incumbents such Airtel, Idea Cellular, Vodafone and existing foreign players including Telenor, Sistema Shyam and others attended the conference yesterday.  In addition to these, Indian player–Mukesh Ambani owned Reliance Industries (RIL)–also participated in the conference. It’s well-known that Mukesh owned RIL has a pan-India broadband wireless access (BWA) license, but it hasn’t any voice spectrum. It’s also pretty clear that if RIL enters in the pre-crowded 2G auction, then it would more intensified the competition in the telecom space.

The participation of the telcos in the conference indicated that the actual auction is going to be more daunting due to aggressiveness of incumbents as well as players whose licenses were cancelled by honorable Supreme Court of India in February of this year. The queries were based on the re-framing of the spectrum proposal by Department of Telecommunication (DoT), and really, the department of telecom was unable to answer most of the auction-related queries; almost 70% of questions related to the auction process wasn’t answered.

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I don’t understand why the DoT did’t respond to operators queries, if it’s not so, then why the department is pretending to answer these queries? It seems that incumbents and other players want to kick off  new guideline proposal for 2G auction. Despite to deliver any answer, the DoT called them to come back on next week (Sep 14) for the further clarity.

Besides, the representatives of DoT informed, ‘Notice Inviting Application’ (NIA) will be issued on September 28 which will contain all the details related to design and conduct of the upcoming 2G spectrum auction, scheduled to begin on November 12. However, in the late August, the telecom department released an official document (memorandum) listing all details related to the eligibility criteria, spectrum to be sold circle-wise and other policy-related information. Actually, the telecom department released the memorandum for telcos so that they could frame their strategies for 2G auction.

I think, prior to release final memorandum, the department of telecom should discuss the glitches rising due new proposed documents for 2G auction. The department should to reach at a norm so that everyone’s right could be protected and they could also expect a healthy competition in the market. However, the discussion is going on these issues and definitely, the department will try to resolve all those issues that have been moved up due to new auction proposal.

Moreover, deputy director general for access service at DoT–AK Mittal–said that successful bidders are free to use any technology but they  will have to inform the government on the kind of technology they have opted due to security concern. One question that was asked by Tata Teleservices’ Anand Dalai during the conference was quite ethical; he wants to know the stance of the telecom department for those operators who had already paid for spectrum, but didn’t get any spectrum in some circles due to non-availability.

Indeed, there’s need of a transparent policy so that all (telcos ) could get equal opportunity in the market. At present, an average revenue per user (ARPU) of all telcos is steadily declining and if we consider the present status of Anil Ambani-owned Reliance Communication, its revenue declined by 12% and net profit plunged by 31% in the fiscal year 2012. A fierce competition is really going to be sparked out by incumbents later this year in Indian telecom sector.

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