Ambani brothers are no-shows at 2G spectrum auctions

New Delhi: In a nail-biting finish to the race for filing applications for the upcoming spectrum auctions, the Brothers Ambani kept everyone guessing till the last moment today, and then chose not to put in any applications at all.

So, on the face of it, neither Reliance Communications, run by Anil Ambani, nor Reliance Industries, run by Mukesh Ambani, will be participating in the auctions directly. The only other absentee was Sistema Shyam Teleservices, which is already locked in a bitter dispute with the government over the cancellation of its licences by the Supreme Court on 2 February.

Also, no new foreign operator has put in an application for these auctions despite the government making special provisions to enable new foreign telcos to apply. Earlier this month, the Department of Telecom (DoT) had permitted foreign entities to participate in the 2G auctions without an Indian partner. However, to start operations in India, such players were required to form a joint venture with an Indian partner later.

DoT plans to conduct an auction for spectrum in the 1,800 Mhz (GSM services) and 800 Mhz (CDMA services) bands so that companies which lost their licences in the wake of the Supreme Court judgment may win back some circles. The cancelled licences include 22 permits of Uninor (joint venture between Unitech Wireless and Norwegian firm Telenor), 21 of Loop Telecom, 21 of Sistema Shyam, 15 of Etisalat DB, six of S Tel, 21 of Videocon, nine of Idea and three licences of Tata Teleservices.

According to industry sources, Bharti Airtel has put in an application for some circles but not pan India; Vodafone has applied for 17 circles and Idea for 6-7 circles. Videocon has applied for both, CDMA and GSM spectrum, but it is unclear if this company has gone pan-India in its applications in either technology.

Telenor has applied through a new company called Telewings and has gone in for a pan-India application, which means for 22 circles. And Tata has applied for its three cancelled CDMA circles.

The question that now begs an answer is what will the three no-shows - Reliance, Reliance Communications (RCom) and Sistema - do, now that they have not even applied for auction participation. The speculation doing the rounds is that at least two of these telcos would look to acquire existing companies once auctions are completed. Unconfirmed reports suggested that Reliance Industries Ltd (RIL) may look to buy out Videocon whereas Sistema has already been in talks to acquire a majority stake in Aircel. But officials of RIL and Sistema were not available for comments.

As per norms released earlier, DoT plans to auction a maximum of 11 blocks of spectrum in the 1,800 Mhz band, each having 1.25 Mhz of spectrum. Companies whose licences were cancelled by the Supreme Court will have to bid for a minimum of four spectrum blocks in a service area to start their services. Earlier, the Union Cabinet had fixed Rs 14,000 crore as the base price for 5 Mhz of 2G spectrum. Existing players, or companies whose licences were unaffected by the apex court judgement, will be allowed to bid for a maximum of two blocks in the 1,800 Mhz band.

As per DoT the timeline, a final list of bidders will be announced on 6 November. This will be followed by a mock auction on 7 and 8 November, and thereafter the e-auction of 1,800 Mhz band will take place on 12 November. The start of e-auction for the 800 Mhz band will happen two days after the close of the 1,800 Mhz band auction.

The spectrum reserve price for the Delhi circle is the costliest at Rs. 693.06 crore per 1.25 Mhz, closely followed by the price for Mumbai at Rs 678.45 crore. Jammu & Kashmir is the cheapest at Rs 6.33 crore. The payment of the successful bid amount will have to be done within 10 days of the close of the respective e-auctions.