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Bidding for spectrum was only choice to continue service:Idea

Nov 15 2012, 21:21 IST
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SummaryIdea Cellular today said it participated in spectrum auction as it was the only choice that company had to continue its service for its subscribers.

Idea Cellular today said it participated in spectrum auction as it was the only choice that company had to continue its service for its subscribers.

"Faced with a Hobson's choice, Idea participated in the auction, which it may not have considered in a normal start-up situation," Idea Cellular said in a statement.

The Supreme Court on February 2 had cancelled 13 licences of Idea Cellular, including 4 of its acquired entity Spice Communications.

The apex court had cancelled 122 telecom permits but allowed them to win spectrum through auction for continuing their services.

Idea Cellular won spectrum in 8 circles which included 7 circles where its licences were cancelled. These seven circles included Jammu and Kashmir, Tamil Nadu, Odisha, Assam, North East, West Bengal and Kolkata.

"The high reserve prices, notwithstanding, the need and desire to ensure continuity of service to our subscribers was upper most in our mind," Idea Cellular Managing Director Himanshu Kapania said.

Additionally it also secured an additional slot of 1.25 MHz of airwaves frequencies for the circle of Bihar.

"With this (2G) auction the company acquires an additional 37.5 MHz of spectrum for Rs 2,031.31 crore at the rate of Rs 54 crore per MHz," the statement said.

The 2G auction received poor response from the market. Bids were received only in 18 out of 22 circles. The total revenue realised from the auction was Rs 9,407.64 crore, which is around 67 per cent less than least expected revenue.

"In the overall analysis the high reserve price and several large markets remaining unsold will prove to the Government that though spectrum may be a scarce resource, it certainly does have a finite price. Increasing the reserve price to stratospheric levels will not result in any greater value being realised," the statement added.

It further said that the company had filed a curative petition before the Supreme Court appealing against the order of February 2, 2012 "and the outcome is awaited".

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