Telecom auction reaction: ‘No business case in buying airwaves at high price’

Sistema decided to stay from the auction while RIL also refrained from participating in the process.

Written by Agencies | New Delhi | Published: October 20, 2012 2:03:31 am

Terming the high reserve price as the reason for firms like Reliance Industries,Sistema,Aircel and RCom staying away from the spectrum auction,telecom industry bodies today said operators see no “business case” in buying airwaves at such a high price.

“We have always maintained that there will be muted demand for the auction process as the reserve price set by the government is too high,” GSM industry body COAI Director General Rajan Mathews said.

In a surprise move,Russia’s Sistema decided to stay from the auction while Billionaire Mukesh Ambani-run RIL also refrained from participating in the process.

RIL was widely anticipated to bid in the November auction of airwaves to complement its wireless broadband services with voice call facility.

“There is no business case for companies to participate in auction with such a high reserve price,” former secretary general of AUSPI,which represents dual technology players,SC Khanna said.

He added after paying such high price for spectrum,the companies won’t be able to offer tariff at lower rates.

“After paying such high price,the companies can be able offer services to customers with tariffs ranging between Rs 1 and 1.50 paisa a minute while the existing players are offering tariffs of 40 paisa a minute… there is no business case for them,” he added.

The government has fixed Rs 14,000 crore as the minimum or base price for the auction that is to begin on November 12.

This is several times Rs 1,658 crore price at which pan-India licence bundled with 4.4 megahertz of spectrum was given by the then Telecom Minister A Raja in 2008.

Videocon Industries Chairman Venugopal Dhoot,however,differ with the associations.

“This time the competition will not be high… but still it’s a good line (up) and … this is not small…2G licences are big and people will be very much interested,” Dhoot said.

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