Winners take it all: fight to finish
AS mobile operators brace up to face the 3G spectrum auctions from April 9, they face a tough choice. While they are aware that winning a slot would boost their business prospects and valuations, the risk of stretching their finances, which could put pressure on their margins also runs high. Simply put, the fight is going to be to the finish. The operators have waited for four long years for the spectrum to be auctioned so that they could move on to newer business models.
It was way back in September, 2006 that the Telecom Regulatory Authority of India (Trai) submitted its recommendations on 3G auctions to the government. Since then it has been a frustrating journey marked by delays, squabbles and eGoMs, leading to the day which would finally see the auctions happening. This is for the first time that the government would discover the market price for the airwaves.
Two years after the Trai recommended the auction of the spectrum, communications and IT minister A Raja announced on August 1, 2008 that the spectrum would be auctioned by the year-end, but since then it took more than one and a half years for the government to actually auction the spectrum.
A few weeks after Raja announced the spectrum auction, which was slotted for December end and January, 2009 the Lehman Brothers? collapse and the subsequent global economic crisis made the government defer the auctions on the fear that liquidity crunch might lead to under valuation of the spectrum and hence a reduction in the subsequent proceeds from the auction.
After the UPA government came back to power in 2009, the government decided to constitute an empowered group of ministers, headed by the finance minister Pranab Mukherjee to resolve the issue of the number of slots and hence the reserve price for the slots to be auctioned.