20.1.14

Reliance Jio to bid for 2G spectrum


Mukesh Ambani is set to make a full-fledged entry into the Indian telecom space with Reliance Jio Infocomm, the high-speed internet venture, applying to bid for 2G mobile airwaves. The move will unleash a fresh wave of competition in voice tariffs and pit the company against top telcos like Airtel, Vodafone and Idea.
Wednesday was the last day for submitting of applications for 2G airwaves in the 900 MHz and 1800 MHz bands, and eight telecom companies — barring the Khaitans-owned Loop Telecom, Dhoots-run Videocon Telecom and Russia’s Sistema-owned Shyam Teleservices — submitted applications for participating in the bidding slated for February 3. The companies, though, have an option to pull out of the sale process as they can withdraw their applications by January 27.
Vodafone had filed the first application, followed by Airtel, Aircel, Tata Teleservices, Idea Cellular, Reliance Jio, Telewings (Uninor) and Reliance Communications, an official source said.
Mukesh Ambani re-entered the telecom space through Jio, which was initially a launch vehicle for offering pan-India 4G services. However, the company had been allowed to offer voice-over-internet after bagging a unified licence. The fresh move to buy 2G spectrum will make the company’s operations available across various telecom platforms, making its offerings the widest among operators, matched only by Airtel.
The fresh sale is expected to fetch the cash-strapped government upwards of Rs.40,000 crore and bidding is likely to be aggressive in the crucial 900 MHz band, which is more cost-productive and efficient for running telecom services. After receiving lukewarm response in the previous two rounds of auctions, the government had slashed reserve prices by 25-53% for this round to get a more aggressive response from companies.
The new reserve price for the pan-India 1800 MHz auction has been fixed at Rs.1,765 crore (per MHz). In 900 MHz, the per MHz price for Delhi will be Rs.360 crore, Mumbai Rs.328 crore and Kolkata Rs.125 crore. Big operators like Airtel, Vodafone and Idea will see their licences in the top metros expire from this year, and with the government going in for re-sale of the vacated spectrum, they are expected to be aggressive in the auctions.
The government plans to sell 403 MHz spectrum in the 1800 MHz band, while in 900 MHz about 45 MHz will be on sale. According to the notice inviting applications, an operator will have to purchase a minimum of 5 MHz.
The 1800 MHz band is being put up for auction following the Supreme Court order that the government sell all spectrum that was freed from the cancellation of 122 licences on February 2, 2012, in the 2G spectrum allocation case. 

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