New spectrum auction norms coercive: Vodafone

NEW DELHI: Telecom operator Vodafone has expressed concern over the recent Cabinet decision on spectrum auction, saying compulsory participation in the auctions is “coercive in nature, at an exorbitant price and on unreasonable terms”.
In a letter to the telecom secretary, the company said this kind of “coercive participation is against the concept of auctions and provision for extension of licences”.
It also said the decision of a licencee being assured of spectrum at extension only if they participate in the auctions is completely untenable both under policy and licence.
The company described the new norms as “unfair, discriminatory, contrary to the terms of licence and against public interest”.
“Spectrum sold at such an auction will not reflect its true market value and therefore will destroy the value and business case for the acquirer. This would clearly be harmful to the interests of public, government and industry,” Vodafone said in its letter to telecom secretary R Chandrasekhar.
Earlier this month, the government allowed a 30% reduction in the base price for spectrum in four circles — Delhi, Mumbai, Karnataka and Rajasthan — where spectrum could not be sold and gave the go-ahead for a fresh round of bidding.
Now, a new round of auction is set to start for spectrum in the 1800 MHz frequency band in the four circles where no telecom firm made any in last month’s auction due to what they described as high reserve price.
The new base price has been pegged at Rs 485 crore for Delhi, Rs 475 crore (Mumbai), Rs 231 crore (Karnataka) and Rs 47 crore (Rajasthan).
Accordingly, spectrum in the 900 MHz band, which is thought to be more efficient, will be auctioned in Delhi, Mumbai and Kolkata. The reserve price for these airwaves would be twice the level discovered for the 1800 MHz slot. Telecom firms expressed concern about the high reserve price but the government has decided to go ahead with the auction to meet its target of raising Rs 40,000 crore from spectrum auction in the current financial year.
Vodafone in its letter said that as an existing service provider, “we are separate class of operators”, contending it should not be treated at par with a new entrant or an existing licencee seeking additional spectrum.
It said the reserve price was too high and completely unjustified on economic, commercial and competitive grounds. “Even independently considered, the reserve price set for Delhi and Mumbai is exorbitant,” the letter said.
It urged the government to review its decision and said the company was willing to pay a market determined price discovered through a fair and successful auction for extension of its licences.