Costly 3G: Telcos may seek compensation

The pan-India bid price for a telco touched a high of Rs 13,473.55 crore at the end of 26 days of auction, with players showing appetite to bid some more across circles.

The government has already raised an assured sum of around Rs 55,000 crore from 3G auction, (including BSNL and MTNL matching bids). The revenue raised is much higher than the government target of Rs 35,000 crore from boh 3G and BWA (broadband wireless access) auction.

Does the high bidding translate into steep 3G tariffs too? An analyst, who didn’t want to be quoted, said while tariffs would be high in some service categories, there would be balanced pricing in the case of other segments. “This will be something similar to economy and business class in the aircraft,” he said.

The analyst also argued that as soon as the auction is over, the winners would make the payment and subsequently make a case for reduction in spectrum charges. The telcos could also lobby together with the government for compensation in some form or the other, citing high 3G bid prices. Even the big telecom operators are learnt to have much exceeded their budget for 3G. As it is, telcos’ profits have dipped because of intense competition in a market with a host of players and extremely low tariffs.

In case the government accepts the industry demand, tariff levels may not sky-rocket, it is felt.

The telecom sector has been witness to this kind of lobbying earlier as well. When the telecom sector was opened up in the 90s, many private operators bid high for 2G telecom licences.

But, when the telcos failed to raise matching revenues, they approached the government seeking a change in regime. The Telecom Policy of 1999 allowed the existing operators to migrate to one-time entry fee and a revenue-share model.

Meanwhile, as the 3G auction is drawing to a close, there was action in the B and C circles as well on Monday. Bihar, in the C Circle, touched a bid price of Rs 107.25 crore, while the reserve price is just Rs 30 crore. Himachal Pradesh in C circle is yet to see any action, while Jammu and Kashmir moved a notch to Rs 30.30 crore. In B circle, Uttar Pradesh (West) scored the highest at Rs 393.06, against a reserve price of Rs 120 crore.

In A Circle, Mumbai remained at the top with a bid price of Rs 2,433.88 crore, followed closely by Delhi at Rs 2,372.97 crore, against a reserve price of Rs 320 crore, respectively.

3G services would help in faster connectivity, enable fast video/ audio download and high-speed data exchange on the mobile phone. Nine telecom companies —- Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications —- are participating in the online 3G auction.