Give Details of Spectrum Allocation During NDA Regime: ED to Vodafone 

The Enforcement Directorate has summoned Vodafone India managing director Marten Pieters and sought a lengthy list of documents from the mobile phone company,including details of bank accounts,annual reports,shareholding pattern and members on its board as part of its probe into the alleged irregularities and losses in the allocation of airwaves when BJP-led National Democratic Alliance was in power.In November 2011,Indias federal investigating body had raided the offices of the countrys largest telcos by revenues Bharti Airtel and Vodafone after it had filed a first information report (FIR) for alleged irregularities that occurred nearly a decade ago.The CBI has alleged that the exchequer suffered a loss of.508 crore after the late BJP leader Pramod Mahajan awarded additional airwaves to these companies in 2002.The Supreme Court,monitoring the 2G spectrum scam,has also ordered an investigation into all airwaves allocated between 2001 and 2007.The ED in its communication had summoned Marten Pieters or his representative to appear before it on April 17.It has also asked the company to provide it with documents related to this period,including details of all airwaves allotted to the company during 2001-02.The Vodafone spokesperson declined to comment.CBI in its FIR has said that DoT officials and former telecom minister Mahajan had taken a hurried decision in January 2002 to allocate additional spectrum beyond 6.2 MHz in violation of a technical committee report.The agency further accused DoT officials and the late BJP leader of favouring these companies and levying only an incremental 1% increase in the revenue share for all additional airwaves.In normal prudence,the incremental 1% is for airwaves beyond 6.2 MHz.In January this year,Vodafone won a four-year legal battle against the government when the Supreme Court ruled that it did not have to pay.12,000 crore in tax because the transaction took place between two overseas firms and there was no provision in Indian law to tax such deals.But finance minister Pranab Mukherjees Budget proposal to retrospectively tax overseas transactions involving local assets may force the worlds biggest mobile operator to stump up some $2.3 billion (.12,000 crore) in taxes.

Sistema Shyams Loss Widens to 1,198 cr in Q4 

OUR BUREAU NEW DELHI 

Sistema Shyam Teleservices losses widened to.1,198 crore for the fourth quarter ended December 2011 as it took into account provision for liquidated damages,licence fee and foreign exchange,as the rupee continued to be weak against the dollar.The telco,which offers mobile and data services on CDMA platform under the MTS brand,saw its quarterly loss expand by 98% from.605 crore in the fourth quarter of 2010.Sistema Shyams net income for 2011 also showed a deeper loss of.3,531.4 crore,63% more than.2,168.6-crore loss reported for 2010.Its accumulated losses aggregated to.7,898 crore while consolidated debt from banks and financial institutions was.8,380 crore.The telcos president and chief executive officer Vsevolod Rozanov said that the telco should begin to reverse this trend and show some profitability this year as the companys losses have peaked in the fourth quarter.Average revenue per user for voice had stabilised while that from data was rising on a quarterly basis.Our non-voice revenue was contributing around 33% to our overall revenues and have risen by 22% in the fourth quarter, he said.SSTL has invested.6,443 crore in capex as of December end,including.200 crore in the fourth quarter.

• 19 Apr 2012
• Hindustan Times (Delhi)
• HT Correspondent

2G CASE: JPC LIKELY TO SPLIT OVER SELECTION OF WITNESSES

Trai moots 10-fold hike in 2G spectrum price 

TIMES NEWS NETWORK 

New Delhi: The telecom regulator on Monday suggested that the government increase the price of spectrum by at least 10 times,raising fears of an increase in mobile tariffs.
While recommending auction as the sole route for granting spectrum,the Telecom Regulatory Authority of India has proposed a floor price of Rs 3,622 crore a megahertz (Mhz) for pan-India spectrum in the 1,800Mhz band,which was allotted to new players by jailed former telecom minister A Raja in January 2008.
At that time,the government had allotted 4.4Mhz spectrum free with telecom licences for which it had levied a fee of Rs 1,651 crore.
If Trais recommendations are accepted,the bidders opting to use GSM technology will have to start bidding for 5Mhz spectrum at Rs 18,110.For CDMA players too,the minimum cost would be around the same level as they will have to seek 2.5Mhz spectrum in the 800Mhz band,where the reserve price has been pegged at Rs 7,244 per Mhz.

Call Tariffs May Rise 

Trai has suggested that existing players move from the 900Mhz spectrum band to 1,800Mhz,which will entail a massive outgo on spectrum fees and capital expenditure Move may hurt Telenor and Sistema Shyam which had lost licences after SC cancelled 122 licences awarded by Raja and were planning to rebid.Even older cos like Vodafone & Bharti could be hit 

Tax fears hit mkts,rupee 


Adecision by Australia-headquartered foreign broking firm Macquarie to close one of its India-focused hedge funds,because of worries about change in Indian tax rules leading to higher taxation,rattled the market sentiment on Monday.The sensex lost 277 points to close at 17,097.Macquaries decision,which came two weeks after foreign broking major CLSA shifted its India-related P-Note operations from Mauritius to Singapore,also led to huge selling by FIIs.The rupee closed at 52.53 to a dollar,weaker by 44 paise,its biggest slide in the last one month.

Burden on Bharti & Vodafone at 



75k cr 

A senior official in a business group that has a substantial presence in the telecom sector described the proposals as an unmitigated disaster for Vodafone,Bharti and Idea.They have to pay Rs 95,000 crore collectively just to retain whatever spectrum they have, the person said.He was referring to another Trai recommendation,known as refarming,in which existing operators have to pay higher minimum or reserve price to retain airwaves allocated to them in the past.The official said initial estimates indicated a burden of Rs 75,000 crore for Bharti and Vodafone.Bharti Airtel shares fell 3.55% to Rs 312.65 on the BSE while Idea Cellular and RCOM shares dropped by 5.51% each to close at Rs 83.25 and Rs 81.50,respectively.A person familiar with the broadband plans of Reliance Industries,Indias largest private sector company,however said claims of a heavy burden on telcos were unjustified.He pointed out that revenue shares paid by the operators would decline from 8% to 1% under the new rules.Further,only 25% or 33% of the minimum or reserve price was to be paid upfront depending on the parts of the spectrum sold and the rest was to be paid over a 12-year period.Sarma said the government could raise about Rs 700,000 crore to be paid by the industry over a 10-year period if it accepts his proposals.

ONLY ONE TELCO CAN GET BACK LICENCE 

Mobile phone companies that lost permits after the Supreme Court cancelled licences awarded in the scandal-tainted 2008 sale will have to pay a minimum of Rs 3,622.18 crore for every unit of 2G spectrum.This is more than 13 times the amount they paid in 2008,when former telecom minister A Raja dished out pan-India permits that came bundled with 6.2 MHz of 2G spectrum for a mere Rs 1,659 crore.Industry experts said a telco will require about five units of 2G airwaves to offer mobile services.This means Norways Telenor will have to shell out at least Rs 18,111 crore to get a new pan-India permit.This is also higher than the 3G auction price in 2010,when five units of airwaves were sold of Rs 16,751 crore after 38 days of bidding.While nine mobile phone companies lost their permits based on the Supreme Court orders,Sarma clarified that only one company could get back its licence in the upcoming auctions.We have said that only 5 MHz or units can be auctioned this year.If in any region incumbents were to take away half these frequencies in the auction,then the company that lost its permit or another new entrant will be given five units provided they are the second-highest bidder.In such a case,the total amount of 2G airwaves sold in that region will be 7.5 MHz, Sarma added.Trai has recommended that CDMA operators pay Rs 7,244 crore for every unit of spectrum on a pan-India basis in the upcoming auctions.Sistema,the lone CDMA player whose licences were quashed by the Supreme Court,will thus have to shell out a minimum of Rs 18,000 crore to retain the 2.5 units of airwaves it has.Under existing rules,CDMA operators are given half the quantum of airwaves given to GSM-based telcos.RCOM and Tata Teleservices,the other CDMA operators,will also have to pay this amount if they decide to take part in the auctions.Back-of-the-envelope calculations indicate the government will get Rs 36,000-54,000 crore this fiscal if it sells up to 7.5 units of 2G airwaves as prescribed by Trai.Trai has also dismissed demands by companies whose licences were cancelled by the Supreme Courts February 2 order that incumbents be kept out of the upcoming auctions.As long as incumbents dont hold more than 50% of the airwaves in a particular band,or have more than 25% of all the frequencies in a region,they can participate.This allows every single existing mobile phone company to take part, Sarma said.He added that incumbents could only bid in blocks of 1.25 units each when the 1800 MHz hand is auctioned.The Trai chairman also said the remaining 2G spectrum would be auctioned in the first half of next year (2013-14 ).The final price discovered in this years 2G auctions will be the reserve price for next years auctions, Sarma declared.The base price fixed by Trai strengthens the national auditors claims that the exchequer lost up to Rs 1.76 lakh crore when Raja gave out mobile permits in 2008 without auctions.While the Comptroller & Auditor General had benchmarked 2G spectrum to prices fetched in the 3G auctions in 2010,Trais reserve price values it even higher.It seems obvious that some of these (Trai) recommendations will create severe negative impact on the entire industry.It is up to the political leadership of India to now ensure that the gains of the past few years of affordable phone calls for Indias people are not undone, Uninor,majority owned by Norways Telenor,said in a statement.Uninor was among the worst-hit by the Supreme Court order as all its 22 licences were quashed.The Cellular Operators Association of India the GSM industry body and the Association of Unified Service Providers of India the association of CDMA and dual-technology players said in a joint statement that Trais recommendations had the potential to derail a sector that is a significant contributor to the national economy.The industry was also hoping Trai would limit its recommendations to the matter referred to it by the Supreme Court,i.e.auction of cancelled 2G licences.However,the expansion of the recommendations to cover such matters as 700 MHz auction,refarming,etc,have caused concerns to the industry relating to existing rights to spectrum conferred by extended licences with operators, they added.

REFARMING OF 900 MHZ BAND 

Trai has also endorsed the demands of Reliance Industries-owned Infotel Broadband and RCOM that the 900 MHz band,considered the most cost-effective for 2G services,and currently used by Bharti,BSNL and Vodafone along with Idea and Aircel in some circles,be redistributed or refarmed among all operators in the upcoming 2G auctions.Trai has recommended that the government actively explore the possibility of refarming spectrum in the 900 MHz band by invoking the authority to change licence conditions.The spectrum available with service providers in the 900 MHz band should be replaced by spectrum in the 1800 MHz band,which should be charged at the price prevalent at the time of refarming, the regulator added.The current occupants of the 900 MHz band have claimed a legal right to this frequency allocated to them for the initial as well as extended licence period.An executive with a leading GSM operator told ET that incumbents would legally challenge Trais recommendations on refarming,and added the exercise would force each operator to incur an additional capex of $3-5 billion.Defending his decision,Sarma said refarming was slated to happen beginning 2014 when licences of incumbents come up for renewal.Since the application for renewal of licences must be made at least 30 months in advance of the expiry of licences,we want the 900 MHz spectrum to be auctioned at least 18 months in advance to enable the winning bidders to be ready with deployment plans.We,therefore,recommended that the auction of 900 MHz spectrum may be carried out in the first half of 2013, Sarma added.Trai has also said the base price for each unit of 900 MHz band should be.7,244.36 crore.This means that if Bharti were to buy back five units of airwaves it has in the 900 MHz band,the company must pay a minimum of.36,221 crore.

4G AUCTIONS IN 2014-15 

Despite Telecom Minister Kapil Sibal announcing the government would complete the sale of airwaves in the 700 MHz bandwidth this fiscal,Trai has recommended the sale be undertaken in 2014-15.Executives across mobile phone companies as well telecom department officials agree the 700 MHz sale could change the countrys mobile broadband landscape as this band is three times more efficient than the 4G frequencies held by RIL.The authority recommends that the auction of spectrum in 700 MHz band may be carried out at a later date,preferably in 2014,as and when the ecosystem for LTE in the 700 MHz is reasonably developed,so as to be able to realise the full market value of the spectrum, Trai said.The regulator added that the base price for this auction could be about.14,500 crore per MHz.In comparison,Infotel Broadband paid.12,850 crore for 20 units of 4G spectrum in the 2010 auctions.But these 4G airwaves are in the 2300 MHz frequency.At prices recommended by Trai,an operator will have to shell out over.290,000 crore for 20 units of 4G spectrum.The regulator has also said the government can do a rerun of the 3G auctions in 2013-14.Here,Trai has said the base price could be around Rs 3,773 crore for every unit in the 2100 MHz band.This is five times higher than the 2010 base price.

Our Proposals Will Help Industry,Claims Trai Chief 

Trais recommendations on spectrum auction have been slammed by all telecom companies with one industry body saying these proposals will kill the telecom story in India.But Trai chairman JS Sarma,who retires next month,in an interview with Joji Thomas Philip strongly defended his proposals and said the authority has gone out of its way to help the industry.Excerpts: 

How did Trai value 2G spectrum at this rate 

We have said that operators can offer any service in the 1,800-MHz band.This can therefore no longer be called a 2G band globally,companies are beginning to offer even 4G services in the 1,800-MHz band.This makes it more valuable than the 3G spectrum that was sold in 2010.Besides,we have allowed telcos to pay out the auction amount over a 10-year period.They only need to pay 33% of the bid amount in the first year after which there is a 2-year moratorium and the remaining payment is then made over a 10-year period.We have further said that revenue share for spectrum secured through auctions will be only 1% of their annual revenues compared with 8% the industry pays now.Also,once operators secure airwaves through auctions,these frequencies are liberalised,they can use it for any service.We have even allowed limited spectrum trading.Trai has gone out of its way to help the industry,to ensure they have a business case.These recommendations will help in the industrys survival.

Will all companies that lost mobile permits due to the Supreme Courts orders be able to win back licences through the upcoming auctions Can incumbents bid 

We have said that only 5 MHz can be auctioned in this year.So only one of the companies that lost their licence or a new entrant,who is not present currently,can be accommodated.Yes,even incumbents can bid.If in any region,incumbents take away half these frequencies in the auction,the company that lost its permit or another new entrant will be given 5 MHz provided they are the second highest bidder.In such a case,the total amount of 2G airwaves sold in that region will be 7.5 MHz.As long as incumbents dont hold more than 50% of the airwaves in a particular band,or have more than 25% of all the frequencies in a region,they can participate.This allows every single existing mobile phone company to take part.The auctions that take place this year will help us determine the market valuation of the spectrum.This will be the base price for the auctions of the remaining 2G spectrum in the 1800-MHz band will be sold in the first half of 2013-14.

Incumbents have complained that reframing of 900-MHz band was not even part of Trais mandate.They also say the implementation of this proposal could increase their capex by 



several billion dollars.

Reframing was slated to happen beginning 2014 when licences of incumbents come up for renewal.Since the application for renewal of licences must be made at least 30 months in advance of the expiry of licences,we want the 900-MHz spectrum be auctioned at least 18 months in advance so as to enable the winning bidders to be ready with the deployment plans.We,therefore,recommended that the auction of 900-MHz spectrum may be carried out in the first half of the year 2013.

You have suggested that 4G auctions in the 700-MHz band be deferred to 2014-15 ... 

The ecosystem does not exist in the 700-MHz band at present.There are hardly any devices in this frequency.We estimate that the ecosystem for 4G in the 700 MHz will be reasonably developed 2014-15 so as to be able to realise the full market value of the spectrum.

• 25 Apr 2012
• Hindustan Times (Delhi)
• Manoj Gairola letters@hindustantimes.com

Phone bills may go up by 3 paise a min

Panel to Seek Finmins Views 

But the panel set up for guiding and supervising the entire process of airwaves auction holds a different view.Two issues deferred payment and allowing spectrum as mortgage to raise funds from financial institutions were discussed.Almost all members were of the opinion that both should not be allowed, said the minutes of the April 23 meeting of the 11-member inter-ministerial committee.The committee will first seek the finance ministrys views before sending its recommendations to the Empowered Group of Ministers on spectrum headed by Pranab Mukherjee,which will take a final call on all issues related to the upcoming auctions.The inter-ministerial panel includes six representatives of the telecom department besides representatives from the departments of economic affairs and information technology,Planning Commission,department of industrial policy and promotion and commerce ministry.This panel had supervised the 3G and broadband wireless auctions in 2010 and was reconstituted in February-end after the Supreme Court directed the government to issue new mobile permits through auctions.A high-ranking DoT official,however,said the telecom department was in favour of allowing deferred payments.Another DoT official said the inter-ministerial committees opinions could not be treated as final and added that the EGoM would meet in early May to consider the views of different panels on the upcoming auctions.As per Trais proposal,a new entrant,or one of the companies whose licences were quashed by the Supreme Court,needs to pay a minimum of about Rs 6,000 crore up front to win back its permits while the remaining Rs 12,000 crore will have to be paid in equal installments after a twoyear moratorium.

• 1 May 2012
• Hindustan Times (Delhi)
• HT Correspondent letters@hindustantimes.com
• >> TELENOR TO WRITE OFF INDIA EXPOSURE: P25

Telecom panel seeks clarity on spectrum auction

Voda Warns Sibal Against Trais Refarming Plan 

Says altering spectrum for licence renewal is legally flawed 

JOJI THOMAS PHILIP & DEEPALI GUPTA NEW DELHI | MUMBAI 

The Indian arm of Vodafone Group,the worlds largest private mobile phone company,has warned telecom minister Kapil Sibal against implementing sector regulator Trais recommendations on refarming redistribution of airwaves in the 900 MHz largely held by incumbents and substituting it with frequencies in the 1800 MHz band when licences of mobile phone companies come up for renewal,beginning 2014.Vodafone said that extension of licences with a different type and quantum of spectrum was legally flawed and added that mobile permits were already technology neutral.The potential change in use of spectrum cannot be the trigger for refarming because technology neutrality is already built to policy and licencing framework, the company said in its communication to Sibal.The telco also accused the Telecom Regulatory Authority of India (Trai) of coming out with its recommendations on refarming without considering its impact on mobile customers,public policy objectives,rural telephony,green telecom objectives and sustainability of the industry.Last week,telecom regulator Trai had recommended that refarming of airwaves in the 900 MHz band,largely held by incumbents and BSNL,be undertaken next year,and industry experts estimate that leading mobile phone companies will have to pay about.90,000 crore to retain the airwaves they hold.Trai had said that the spectrum available with incumbents in the 900 MHz band should be replaced by spectrum in the 1800 MHz band,which should be charged at the price prevalent at the time of refarming.On Friday,using unusually harsh language,the chief executives of five mobile phone companies Bharti Airtel,Vodafone,Idea,Uninor and Videocon had told Sibal that accepting the regulators flawed,retrograde,regressive and uncertain recommendations would irretrievably harm consumer interests,ring the death knell for the sector and lead to prolonged disputes and litigation.Bharti Airtel CEO for India and South Asia Sanjay Kapoor,Vodafone India MD and CEO Marten Pieters,Idea Cellular managing director Himanshu Kapania,Uninor CEO Sigve Brekke and Videocon Telecommunications director and CEO Arvind Ball had also alleged that the regulator had not carried out any study to examine the sociotechno-economic aspects and had ignored contractual and other rights of the affected operators.The refarming of 900 MHz is sought to be justified on the basis of the socalled liberalisation,which is completely untenable since we are in an acknowledged technology-neutral environment since September1999.This aspect,could itself lead to protracted disputes, their communication to Sibal had said.Vodafones latest communication added that the substitution of airwaves will disrupt services.

TDSAT Quashes Extra Penalty of.38 cr on SSTL for Rollout Delay 

PTI NEW DELHI 

The telecom tribunal has quashed the additional penalty of.38.35 crore imposed on Sistema Shyam Teleservices (SSTL) by the Department of Telecommunications (DoT) for allegedly delaying network rollout in nine telecom circles.A Telecom Disputes Settlement and Appellate Tribunal (TDSAT) bench,headed by Justice SB Sinha,termed the additional penalty imposed on SSTL as violation of principal of natural justice.Demands raised towards additional LD (liquidated damages) has been quashed as the same have been issued in violation of principles of natural justice, TDSAT said in its order.SSTL,a joint venture between the Sistema of Russia and Indias Shyam Group,offers mobile and data services under the MTS brand.Sistema owns 56.68% stake,the Russian government represented by Rosimushchestvo (Federal Agency for State Property Management) 17.14% stake and Indian company Shyam Telelink has 26.05% stake in SSTL.DoT had raised a total demand of around.69 crore through various notices till January 2011 for SSTL allegedly failing to meet roll-out obligation in various circles.These fines were quashed by TDSAT in January,2012.In December 2011,DoT had imposed additional liquidated damages of.38.35 crore on SSTL for alleged non-fulfilment of first year rollout obligations within the stipulated time frame for nine circles Odisha,UP (East),UP (West),J&K,Punjab,Himachal Pradesh,North East,Gujarat and Madhya Pradesh.