NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Telecom firms hang up on CDMA spectrum

Telecom firms hang up on CDMA spectrum

Last updated on: November 6, 2012 10:28 IST

Telecom firms hang up on CDMA spectrum


BS Reporter in New Delhi

Tata Teleservices Ltd (TTSL) on Monday decided to pull out of the upcoming 2G spectrum auction, leaving no takers for spectrum in the CDMA 800-MHz band.

This will deprive the government of around Rs 18,300 crore (Rs 183 billion), the value based on the base price for 95 MHz of spectrum on offer in this band.

The base price of 800 MHz was fixed at 1.3 times that of 1,800 MHz, which was Rs 14,000 crore (Rs 140 billion) for five-MHz pan-India spectrum.

Five operators - Bharti Airtel, Vodafone, Idea Cellular, Telewings, the new company floated by Telenor, and Videocon - decided to stay put and take part in the auction of the 1,800-MHz band, used for 2G services.

However, based on the earnest money deposits (EMD) made by the telcos, most experts admit that except for two-three circles, the auction will be over in only a few rounds, if not the first itself.

Click NEXT to

Image: Ratan Tata, chairman of Tata Sons, the promoter holding company of the Tata group
Photographs: Kevin Lamarque/Reuters


Telecom firms hang up on CDMA spectrum

Prev     Next


The Department of Telecommunications (DoT) had fixed on Monday as the last day when operators could withdraw bids for which they had furnished EMD.

With such a muted response, the government's target to get Rs 40,000 crore (Rs 400 billion) from the 2G spectrum auction and the one-time payment for spectrum is expected to fall by the wayside.

Analysts say based on EMD, a fair idea can be made of the circles they want to bid in. So, while the total base price of the spectrum up for grabs in the 1,800-MHz band is around Rs 35,000 crore (Rs 350 billion), based on the circles operators have bid for, the government would not garner more than Rs 21,000-23,000 crore (Rs 210 – 230 billion).

With operators needing to give only 33 per cent of the money upfront, they will fork out under Rs 7,500 crore (Rs 75 billion).

Based on the government's own assumption that it will be able to get Rs 32,000 crore (Rs 320 billion) from one-time spectrum charges, this means an upfront payment of over Rs 10,500 crore, or Rs 105 billion, (again, only 33 per cent has to be paid upfront). So, the government would not be able to get more than Rs 18,000 crore (Rs 180 billion) this financial year.

Click NEXT to

Photographs: Reuters

Prev     Next

Telecom firms hang up on CDMA spectrum

Prev     More


Late last week, Videocon was the first operator to announce it was withdrawing from the CDMA auction. The company had deposited Rs 220 crore (Rs 2.2 billion) for CDMA spectrum, which would be enough to bid in seven circles.

While Tata Teleservices had made an EMD of only Rs 22.5 crore (Rs 225 million), it was enough for them to bid for the three circles in which it had lost licences on a Supreme Court order.

Bidders EMD
(Rs cr)
EMD (Rs cr)
% EMD of maximum
possible submitted
Idea 1,306.75 1,338 97.66
Telewings 1,096 2,120 51.70
Videocon 648 2,120 30.57
Vodafone 229 1,060 21.60
Bharti 102.75 1,060 9.69
EMD: Earnest money deposit
Assuming new GSM operators bid for 4 slots (maximum 5 are allowed); assuming new players bid up to five MHz in all the circles and older players up to 2.5 MHz in all circles

These circles were Assam, the north-east and Jammu & Kashmir. Top sources say the telco decided to pull out as it was unwilling to pay a high price for spectrum in circles that did not contribute significantly to revenues.

Speaking to Business Standard, Venugopal Dhoot, chairman of Videocon Group, reiterated the same point. "Our partners said the price of spectrum in CDMA is too high and it is not viable to have a business model. That is why we withdrew," he said.

Photographs: B Mathur/Reuters

Prev     More