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Spectrum delay triggers talk of black market

business Updated: Oct 15, 2007 22:34 IST
Archana Khatri

While the Department of Telecommunications (DoT) may be finding it tough to arrive on a mechanism to sift "non-serious" players out of 576 applications and 46 applicants who have applied for licences to operate telecom services, the free-for-all has already triggered talk of a "black market" of sorts in scarce spectrum allocation.

Industry sources say that some of these applicants with no previous experience in telecoms, aiming and hoping to get wireless spectrum on a first-come-first-served basis, are already sounding out potential buyers.

"What else are they in this for? The game is clear. Some are quoting as much as Rs 6,000 to 7,000 crore licence already," said an industry executive, who did not want to be identified.

The race has brought in a motley mix of seasoned players, aggressive corporates and me-too applicants hoping to re-sell permits, say industry watchers.

Some seasoned players want auctions and plan court action if the method to allocate spectrum is not based on merit or auction.

Most applicants want pan-India licences, which on current pricing would need Rs 1,600 crore each. Some say a licence could fetch as much as Rs 15,000 crore.

"I have had people coming to me for Rs 4,000 crore," said an executive with a telecom company.

Typically, the expectation is that licence holders with no prior telecom experience can potentially exploit the situation by getting into lucrative partnerships with seasoned players, in effect getting a pure "black market" kind of premium.

Both experienced and inexperienced players are in the fray after the Telecom Regulatory Authority of India in August recommended an unlimited number of players to enter each circle. The crucial question of how 2G spectrum will be allocated is still open.

Swiss operator Bycell, CD-maker Moser Baer, US telecom giant AT&T with its Indian partner Mahindra Telecommunications, a subsidiary of copper smelter firm Sterlite Industries, Sterlite Infrastructure, consumer durable major Videocon and telecom value added service provider Celebrum were among those who have sought telecom licences.

Realtors DLF, Unitech and Parsvnath Developers and financial service group Indiabulls were among early applicants

The Department of Telecommunications (DoT) is though gearing up to weed out the "non-serious" applicants – jargon for those who may want to trade their licences or cash out with lucrative partnerships, but may find itself in a quandary over whom to accept and whom to reject.