Videocon dials 2G even as RIL, RCom, Sistema decide to stay out of auction

The government seems to have got a lukewarm response for the upcoming 2G spectrum auction, from which it is hoping to rake in Rs 40,000 crore, as leading telecom companies such as Airtel, Idea Celluar, Vodafone India and Tata Teleservices have shown an interest in bidding only for a limited number of circles.

The last day for submitting applications for the auction was Friday. The government had fixed a high reserve price of Rs 14,000 crore.

The fact that billionaire Mukesh Ambani-run Reliance Industries Ltd (RIL), his younger brother Anil Ambani's Reliance Communications and cash-rich Russian telecom major Sistema have decided to keep out of the bid also comes as a dampener.

It was widely anticipated that RIL would bid aggressively to complement its wireless broadband services with voice call facility. A senior official admitted that the bidding may not be as aggressive without the Ambani brothers and Sistema.

However, the industry buzz is that with Videocon bidding for spectrum in both Global System for Mobile (GSM) and Code Division Multiple Access (CDMA) technologies, there is a window for RIL to step in later.

Videocon Industries Chairman Venugopal Dhoot did not rule out the possibility of an alliance with RIL.

"We have been having a very good friendship with RIL. We are always getting advice from them. I don't commit (what will happen in future) but Mukesh Ambani's advice will continue. Yesterday only, I met him," Dhoot told a TV channel.

Mukesh had followed a similar strategy in June 2010, when he made a dramatic entry into the telecom sector by buying a 95-per cent stake in Infotel Broadband just hours after the Nahata family-owned company became the sole winner of pan-India BWA airwaves in an auction.

Bharti Airtel has applied for four to five circles in tier-III towns and is not bidding for metro circles. Similarly, Vodafone has applied for 17 circles and is not bidding for metro circles.

Official sources confirmed that Tata Teleservices has submitted applications to bid only for three circles where it lost its CDMA permits after the Supreme Court cancelled 122 licences.

Likewise, Idea Cellular will bid for nine circles, where the company lost its licences.

On the other hand, Sistema, according to industry sources, is in talks with Aircel, which operates in 23 circles with both GSM and CDMA technologies.

Norwegian telecom major Telenor has also joined the fray but is still playing its card close to the chest as far as the final bidding is concerned.

The Department of Telecommunications (DoT) is conducting auction of airwaves in the 1,800 Mhz band, which are used for GSM services, and 800 Mhz band, being used for CDMA services. These include 22 telecom licences of Uninor (joint venture between Unitech Wireless and Telenor), Loop 21, Sistema-Shyam (SSTL) 21, Etisalat-DB 15, STel 6, Videocon 21, Idea nine and TTSL three.

In case of 800 Mhz band, there is a shortage of spectrum and only three blocks of 1.25 MHz each in 19 circles will be auctioned. In Punjab and Andhra Pradesh circles, only two blocks will be auctioned.

In association with Mail Today