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RCom disagrees with top 3 telcos on 3G bandwidth pricing

NEW DELHI: Top three telcos Bharti Airtel, Vodafone India and Idea Cellular have backed pricing the 2100 MHz (3G) band based on their technical efficiencies vis-a-vis that of the 2G spectrum in the 1800 MHz band, a view opposed by Reliance Communications, the No 4 player.

Anil Ambani-owned Reliance Communications (RCOM) instead said that the base price of 3G airwaves for the upcoming February auctions should be based on the potential growth in data usage or by linking it to the winning price of the May 2010 sale of 3G bandwidth, “using indexation methodology on SBI PLR,” options rejected by the top three operators.

All the named operators, barring Vodafone, though said that 80 per cent of the airwaves value should be adopted as reserve price. The Indian unit of the British telecom major Vodafone Group wanted the base price to be lower.

The four operators were among the 13 comments received by the Telecom Regulatory Authority of India (Trai), in response to its consultation paper seeking views on the pricing of the 3G bandwidth that could be auctioned in February along with those in 2G bands of 900 MHz and 1800 MHz.

All the comments were consistent on one point though — demanding more quantum of 3G airwaves which would be auctioned and a rational pricing. 3G airwaves are used to offer high speed broadband services, but no operator currently has a pan-India footprint.

Rajan S Mathews, directorgeneral, COAI, said that the auction-determined prices obtained in the 2100 MHz band sale in 2010 do not provide basis for the valuation for the upcoming auctions as it was not just higher than the international benchmarks, but led to the operators deteriorating financial performance, which should be considered. COAI represents GSM operators like Bharti Airtel, Vodafone and Idea.

“The last auction of 2100 MHz led to irrational bidding in a supply constrained environment. As a result, the final discovered price cannot be considered as a reference for determining the value or reserve price of spectrum in 2100 MHz for the upcoming auction,” Bharti Airtel said in its response.

RCOM, however, said the indexation method based on SBI PLR should be one of the mechanisms for determining the valuation of 2100 MHz as this auction gives an opportunity to augment its existing holding of the similar data centric services-capable spectrum.

The department of telecom (DoT) is likely to auction one slot (5 MHz) of 3G spectrum in 17 circles, which can accommodate one more telecom operator in those regions. This came after the defence ministry agreed to release the 5 MHz of airwaves in the 17 circles as agreed in 2009. The telecom ministry is trying to convince the defence to swap 15 MHz of 3G bandwidth that it holds – which can accommodate up to three more operators – in exchange of 2G airwaves held by the former.

The previous 3G auctions in 2010 generated close to Rs 67,000 crore for the government but left the operators bleeding, stuck with debt of over Rs 2 lakh crore. The government estimates at least Rs 5,000 crore revenue from the sale of 3G airwaves in the current fiscal year.

Source: ETTelecom

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