Supreme Court rejection of relief for telcos to fire up auctions starting today

Written by fe Bureau | New Delhi | Updated: Feb 3 2014, 14:22pm hrs
TelecomThe telecom companies had moved the apex court on Saturday after the (TDSAT) rejected their plea for an extension of their licences. Reuters
With the Supreme Court (SC) on Sunday refusing telecom players like Bharti Airtel and Vodafone immediate relief in the matter of their licences being renewed for another 10 years, auctions for spectrum in the 1800/900 MHz bands, starting Monday, should see good participation. The government is hoping to mop up close to Rs 40,000 crore from the auctions.

The telecom companies had moved the apex court on Saturday after the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Friday rejected their plea for an extension of their licences.

Licences of Bharti in Delhi and Kolkata and Vodafone in Delhi, Mumbai and Kolkata are due to expire in November 2014 as the 20-year lease comes to an end.

Under the governments policy, the spectrum held by them in the 1800 and 900 MHz bands in these circles would be put up for auction and the companies would have to buy it back.

The telcos, however, have been asking that their licences be extended for another 10 years based on mutual discussions, arguing that their licence conditions never mentioned a provision for an auction.

While a bench comprising justices AR Dave and SA Bobde in a special court hearing admitted the telcos plea challenging the TDSAT order, it refused to grant any interim relief, saying they could not enjoy a monopoly forever and that this is bound to happen.

Bharti and Vodafone have a total of 10 MHz spectrum each in Delhi and Mumbai. (However, Bhartis Mumbai licence came after 1994 and, therefore, its not up for renewal this November.) Of this, 8 MHz is in the more efficient 900 MHz band while the remaining 2 MHz is in the 1800 MHz band.

In Kolkata, Bharti has 6.2 MHz spectrum in the 900 MHz band and 1.8 MHz in the 1800 MHz band, while Vodafone has 7.8 MHz in 900 MHz and 2 MHz in the 1800 MHz band. All these airwaves will now be auctioned and the telcos will need to buy it back. While Bharti and Vodafone plan to participate in the auctions, Loop Mobile, which operates in Mumbai, does not intend to take part. The company has 8 MHz of spectrum in 900 MHz band and 2 MHz in the 1800 band in the Mumbai circle.

While there is abundant spectrum in the 1800 MHz band in these circles, airwaves in the 900 MHz band, where Bharti and Vodafone will have to compete with players like Idea Cellular Ltd and Telenor, are limited. Should they get 5MHz instead of, say, 8 MHz which they currently hold in this band, they might need to reconfigure their networks.