New mobile licence: Who are in the lead?

Incumbent telecom operators and Russian-promoted ByCell are likely to be the major beneficiaries of two key recommendations by the Department of Telecommunications that new mobile licences be limited to two operators per circle and additional spectrum be given to three to five existing players.

Both allotments, DoT proposes, should be on a first-come, first-served basis.

Going by application dates, companies like Spice, Birla-promoted Idea Cellular, Reliance Communications (through Swan and Cheetah) and Hindustan Futuristic are in the lead for licences in different circles. The only new player in the list is the little-known ByCell.

Several incumbents like Idea Cellular, Maxis-Aircell, owned by a Malaysian promoter, and Vodafone-Essar lead the list of applicants for initial spectrum allocation since they already hold licences but have not received spectrum, the radio frequency for mobile communications, owing to a shortage.

Companies like Bharti Airtel, India's largest private sector telecom company, and Reliance Communications, Idea Cellular and Vodafone-Essar will also be among the leading players entitled to additional spectrum as they have already reached the required subscriber numbers for their allocation.

In effect, dozens of new applicants like DLF Ltd, Unitech, Videocon, AT&T-Mahindra, Indiabulls, the Ispat group and others will be nowhere in the reckoning for being granted spectrum should they get licences.

A final decision on this strategy is expected in a day or two. DoT officials are learnt to have discussed the proposal with Communications Minister A Raja over the past couple of days.

Till October 1, the last date for submitting applications for telecom licences, DoT had received 575 applications filed by 46 companies.

Spectrum allocation has been a bone of contention between the government and private telecom companies, which have been demanding higher allocation owing to the accelerating pace of subscriber growth (6 million a month).

The government had put additional spectrum allocation in cold storage owing to an acute shortage and pending an agreement with the defence ministry to release additional spectrum.

Private operators have also expressed discontent that government-owned Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd have already been given additional spectrum in the past few months.

Analysts said the only way DoT can accommodate the aspirations of the new players is to go in for an auction of spectrum.

A senior official involved with the process told Business Standard that the government expects to get around 25 Mhz of spectrum freed from the defence services.

Of this, it intends to provide a minimum of 8 to 10 Mhz to existing operators to meet their expansion needs. "That leaves only around 15 Mhz for new operators," he said.

Since a new operator is initially given 4.4 Mhz, only three new players per circle can be accommodated. Under current norms, companies that already have a licence (Aircel, Vodafone-Essar and Idea Cellular) will have to be given spectrum first, followed by operators that have applied to expand their networks to other circles nationwide (Spice, Idea Cellular, for example).