India's latest effort to auction its telecoms airwaves is likely to face delays to its latter stages, after the Supreme Court said on Thursday that no decision would be final until a round of legal complaints on the sale mechanisms was completed.
This could prove painful for the government, which is under pressure to slash its fiscal deficit and had hoped to plug initial payments from telecoms firms, an estimated $3.5 billion, into the current fiscal year ending March 31.
The formal auction process begins on Wednesday next week and there is no deadline for completion. The next Supreme Court hearing is scheduled for March 26.
The court allowed the government to go ahead with the auction as per schedule but made it clear that the outcome of the auction would not be finalised without the court's permission, a lawyer present told Reuters.
The Supreme Court made the ruling, confirmed by two sources from bidding companies, after several providers appealed to local courts, questioning sale guidelines and criteria.
India earlier sold airwaves for basic mobile services through a state-selection process, but switched to an open auction in 2012 after a mis-selling scandal.
Market leaders Bharti Airtel and Vodafone, along with competitors Idea Cellular and Reliance Communications (RCom) are among the eight carriers participating in the auction next month, through which the government expects to raise a total of over $13 billion.
Offering access to the world's second-largest mobile market after China, the auction is expected to see aggressive bidding, after cash-rich Reliance Industries Ltd - a newcomer backed by India's richest man Mukesh Ambani and not related to RCom - placed the highest pre-auction deposit.
Ambani's Reliance has earmarked close to $12 billion for its yet-to-be-launched telecoms venture, Reliance Jio Infocomm, since returning to the sector in 2010 by acquiring nationwide 4G data permits.
However, the aggressive push could cause problems for younger brother Anil's RCom, which has spectrum in seven "circles" or regions, contributing about a third of its revenue, expiring later this year.
Analysts say RCom's ability to bid would be constrained by a net debt burden, which stood at close to $6 billion at the end of 2014.
The renewal of 177.8 Mhz of the premium 900 megahertz band is expected to see the most fierce competition as carriers seek to expand in a fast-growing market for data services.
"I expect the bidding to be quite intense. I don't expect any company to forgo the opportunity because they all need the spectrum," said Mahesh Uppal, director of telecom consultancy firm Com First.
Companies have the right to use the airwaves won in the auction for 20 years and need to pay a quarter to a third of the winning price upfront, with the remainder paid by 2027.
- See more at: http://www.businessworld.in/news/business/telecom/auction-of-telecoms-airwaves-likely-to-face-delays/1754278/page-1.html#sthash.7t4OZ3NH.dpuf
India's latest effort to auction its telecoms airwaves is likely to face delays to its latter stages, after the Supreme Court said on Thursday that no decision would be final until a round of legal complaints on the sale mechanisms was completed.
This could prove painful for the government, which is under pressure to slash its fiscal deficit and had hoped to plug initial payments from telecoms firms, an estimated $3.5 billion, into the current fiscal year ending March 31.
The formal auction process begins on Wednesday next week and there is no deadline for completion. The next Supreme Court hearing is scheduled for March 26.
The court allowed the government to go ahead with the auction as per schedule but made it clear that the outcome of the auction would not be finalised without the court's permission, a lawyer present told Reuters.
The Supreme Court made the ruling, confirmed by two sources from bidding companies, after several providers appealed to local courts, questioning sale guidelines and criteria.
India earlier sold airwaves for basic mobile services through a state-selection process, but switched to an open auction in 2012 after a mis-selling scandal.
Market leaders Bharti Airtel and Vodafone, along with competitors Idea Cellular and Reliance Communications (RCom) are among the eight carriers participating in the auction next month, through which the government expects to raise a total of over $13 billion.
Offering access to the world's second-largest mobile market after China, the auction is expected to see aggressive bidding, after cash-rich Reliance Industries Ltd - a newcomer backed by India's richest man Mukesh Ambani and not related to RCom - placed the highest pre-auction deposit.
Ambani's Reliance has earmarked close to $12 billion for its yet-to-be-launched telecoms venture, Reliance Jio Infocomm, since returning to the sector in 2010 by acquiring nationwide 4G data permits.
However, the aggressive push could cause problems for younger brother Anil's RCom, which has spectrum in seven "circles" or regions, contributing about a third of its revenue, expiring later this year.
Analysts say RCom's ability to bid would be constrained by a net debt burden, which stood at close to $6 billion at the end of 2014.
The renewal of 177.8 Mhz of the premium 900 megahertz band is expected to see the most fierce competition as carriers seek to expand in a fast-growing market for data services.
"I expect the bidding to be quite intense. I don't expect any company to forgo the opportunity because they all need the spectrum," said Mahesh Uppal, director of telecom consultancy firm Com First.
Companies have the right to use the airwaves won in the auction for 20 years and need to pay a quarter to a third of the winning price upfront, with the remainder paid by 2027.
- See more at: http://www.businessworld.in/news/business/telecom/auction-of-telecoms-airwaves-likely-to-face-delays/1754278/page-1.html#sthash.7t4OZ3NH.dpuf
India's latest effort to auction its telecoms airwaves is likely to face delays to its latter stages, after the Supreme Court said on Thursday that no decision would be final until a round of legal complaints on the sale mechanisms was completed.
This could prove painful for the government, which is under pressure to slash its fiscal deficit and had hoped to plug initial payments from telecoms firms, an estimated $3.5 billion, into the current fiscal year ending March 31.
The formal auction process begins on Wednesday next week and there is no deadline for completion. The next Supreme Court hearing is scheduled for March 26.
The court allowed the government to go ahead with the auction as per schedule but made it clear that the outcome of the auction would not be finalised without the court's permission, a lawyer present told Reuters.
The Supreme Court made the ruling, confirmed by two sources from bidding companies, after several providers appealed to local courts, questioning sale guidelines and criteria.
India earlier sold airwaves for basic mobile services through a state-selection process, but switched to an open auction in 2012 after a mis-selling scandal.
Market leaders Bharti Airtel and Vodafone, along with competitors Idea Cellular and Reliance Communications (RCom) are among the eight carriers participating in the auction next month, through which the government expects to raise a total of over $13 billion.
Offering access to the world's second-largest mobile market after China, the auction is expected to see aggressive bidding, after cash-rich Reliance Industries Ltd - a newcomer backed by India's richest man Mukesh Ambani and not related to RCom - placed the highest pre-auction deposit.
Ambani's Reliance has earmarked close to $12 billion for its yet-to-be-launched telecoms venture, Reliance Jio Infocomm, since returning to the sector in 2010 by acquiring nationwide 4G data permits.
However, the aggressive push could cause problems for younger brother Anil's RCom, which has spectrum in seven "circles" or regions, contributing about a third of its revenue, expiring later this year.
Analysts say RCom's ability to bid would be constrained by a net debt burden, which stood at close to $6 billion at the end of 2014.
The renewal of 177.8 Mhz of the premium 900 megahertz band is expected to see the most fierce competition as carriers seek to expand in a fast-growing market for data services.
"I expect the bidding to be quite intense. I don't expect any company to forgo the opportunity because they all need the spectrum," said Mahesh Uppal, director of telecom consultancy firm Com First.
Companies have the right to use the airwaves won in the auction for 20 years and need to pay a quarter to a third of the winning price upfront, with the remainder paid by 2027.
Source:
http://www.businessworld.in/news/business/telecom/auction-of-telecoms-airwaves-likely-to-face-delays/1754278/page-1.html
