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Telecom Disputes Settlement Appellate Tribunal rejects 2G licence extension pleas; options narrow for Loop Mobile

Saturday, 1 February 2014 - 9:44am IST | Place: Mumbai | Agency: DNA
May be forced to exit telecom sector

The Telecom Disputes Settlement Appellate Tribunal (TDSAT) on Friday rejected the pleas of Bharti Airtel, Vodafone, Idea Cellular and Loop Mobile, for extension of their 2G spectrum licences expiring in November 2014.

This may force Loop Mobile, which had kept away from 2G auction as it was confident of its licence extension for its single Mumbai circle, out of the telecom sector and being taken over by a rival. A Loop spokesperson said, “Loop Mobile is exploring all other possible options seeking extension of its licence and continuation of its services in Mumbai.”

Bharti Airtel, Vodafone and Idea Cellular declined to comment. All these telecom firms can now appeal to the Supreme Court for licence extension– an option that may be explored as early as Monday, said Rajan Matthews, director general, Cellular Operators Association of India (COAI). In a hearing today, a tribunal bench headed by Justice Aftab Alam said, “Any extension of the expiring licences is bound to undermine the implementation of the policy and that is justification enough and sufficient for the government to decline the extension”.

He said, “As a consequence of denial of extension of licences, all the spectrum held by the three petitioners are put in the pool of spectrum that is going to be put on auction on the coming Monday. As a result, on the expiry of their licences in November 2014, the assignments and holdings of those spectrum would depend upon the result of the auction.”

A very large portion of spectrum held by the three companies fell in the valuable 900 MHz band and a relatively very small portion was in 1800 MHz band.

The development would see the telcos bidding aggressively in the upcoming auction in order to ensure continuance of their operations beyond November.

On whether Airtel, Vodafone and Idea are expected to bid more aggressively after Friday’s verdict, Matthews said, “Airtel and Vodafone were very clear about paying only market price, so this verdict will not see them bidding more aggressively.”

He said, “In case the Supreme Court rules in favour of the telcos to extend their licences, then the auction may have to be halted temporarily with new rules and spectrum put up for bidding – keeping in mind first preference given to these four telcos.”

 However, it is likely that the apex court may take time in delivering a verdict and not interrupt the auction process. In case the SC upholds the TDSAT verdict, Loop will have to look for options to sell their assets like subscriber base and valuable 900 MHz spectrum in Mumbai circle to an interested party before November, he said. “Talks in this direction have already begun – and all the top three players, i.e. Airtel, Idea and Vodafone will be interested in Loop’s assets.”

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