Mobile operators are likely to fiercely oppose the government’s move to allow only two private operators apart from BSNL/MTNL in the 3G space. On March 29, ToI reported the Telecom Commission’ (TC) intent to allow through an auction, only three operators in 3G, with an initial allocation of 10 MHz spectrum each rather than six operators with 5 MHz spectrum each. It further proposes that one of these three operators should be state-owned BSNL/MTNL, which will be required to match the highest bid placed by private operators when the auction occurs.
This development leaves at least four of the existing six operators and nearly all of the new operators without 3G spectrum, a fearful thought for companies whose valuation and growth is acutely linked to the availability of spectrum in 2G and migration to 3G.
Some of the largest operators spoke to ToI on conditions of anonymity. “The government’s 3G proposal is both flawed and totally inconsistent with its policy of open competition in the 2G arena. How can the country have upto 12 operators per circle in 2G and merely 3 operators in 3G?” they say. 5 MHz of 3G spectrum for six operators is the way to go. Even in Europe, most 3G operators did not use even 5 MHz for the longest period of time,says another players. Experts feel that a combination of 7 MHz-10 MHz in 2G with 5 MHz in 3G would be an ideal and in fact, potent combination for many operators.
Ironically, the 3G proposals in their present form carries the potential of bringing together warring parties like Vodafone, Idea and Bharti, who could join hands with Reliance, Tatas and some of the new entrants to lobby for more slots (5 MHz) than fewer (10 MHz) as is currently proposed. This is critical for them as the uncertainty over 3G spectrum forces a serious and potentially crippling review of company valuations, at least till the final winners are declared. Interestingly, the GSM association is yet to take a public stance on the TC’s latest proposal.