Top telecom operators are likely to move court,seeking a stay on the spectrum auction less than three weeks away. If theIndustry does move court, this will be its first face-off with the Modi government, which many had hoped would change the fortunes of the ailing sector.
Their case may be based on a clause of their agreement with DoT, which says that on expiry, licences for the 900 Mhz band will be extended on mutually agreed terms for 10 years (without any requirement to purchase spectrum through an auction).
Further, the operators want the government to put up all the available spectrum for sale. At present, for instance, the government is only putting up 25% of the 2100 Mhz spectrum, on which operators run 3G services.
In fact, the regulatory body, TRAI, had even asked for some airwaves to be taken back from state-run telcos and anon-operating telco, and put that up for sale.
These measures would have reduced bidding intensity somewhat, without necessarily compromising the government’s fundraising.
A previous attempt by Airtel and Vodafone to stall the sale was turned down by the Supreme Court last month. It, however,kept their plea seeking renewal of their licences for 900 MHz spectrum pending.Their licence is scheduled to expire in December 2015.
If the courts do indeed grant a stay this time,it could hurt the government’s plan of raising over Rs 80,000 crore to confine the budget deficit to 4.1%. About a third of the amount is expected to come in this fiscal.
Add the cost of finance and capex to that of spectrum, and we are looking at a huge burden to an already stressed industry.
With only one bidder, the auctions of 2013 were a total flop because of a high reserve price that had no congruence with market realities.
A successful auction is not one where just the government makes money, but the industry also benefits.
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