16 more set to join spectrum queue as Dot readies LoIs

NEW DELHI: The department of telecom (DoT) is set to issue letters of intent (LoIs) to 16 companies, including the likes of ByCell, Swan, Cheetah, S Tel, Parsvnath, Datacom, Unitech, Shyam, BPL Mobile and Indiabulls, for starting mobile services.

All these telcos had applied for licences before September 25, 2007. The LoIs will be issued within the next couple of days, sources close to the development told ET.

Each company will have to pay Rs 1,651-crore licence fee for a pan-India licence (less if it has applied only for some circles), and wait in queue for spectrum, which will be allotted once the defence forces vacate a part of their spectrum.

Commercial services can be launched only after spectrum is allocated. Each LoI holder, after it pays the licence fee, will be entitled to 4.4 MHz of GSM spectrum per circle, subject to availability.

The LoI and licence fee deposit will guarantee these companies a place in the queue for spectrum, and will possibly result in them playing a more active role in the hectic lobbying currently underway on the spectrum issue.

The LoI holders, however, will face a piquant choice. They are required to pay Rs 1,651 crore for a pan-India licence without any guarantee on when spectrum will be allotted. At the same time, they are aware that once spectrum is allotted, their investment could be worth several thousand crores and their is nothing that prevents them from selling off to some other party.

Importantly, under the existing first-come-first-served policy, three existing operators—Idea, Aircel and Vodafone—which have already been allotted licences but are awaiting spectrum to launch services, will be placed ahead of these 16 companies in the queue for spectrum. Idea is awaiting spectrum in 2 circles, Aircel in 7 and Vodafone in 6.

A total of 46 companies had applied for licences before the October 1, 2007, cut-off announced by DoT. Big names such as AT&T, Sterlite, Videocon, DLF, Ispat and Moser Baer, among others—all of whom applied after September 25—failed to make the cut.

Sources said many players among the remaining 26 that had applied for licences after September 25, but before October 1, had already planned to go to court challenging DoT’s move to process applications received only before September 25.
DoT has already clarified that the remaining applications would be processed later.

“The procedure for processing the remaining applications will be decided later if any spectrum is left available after processing the applications received up to September 25, 2007,” communications minister A Raja told Prime Minister Manmohan Singh in a communication last month.

Importantly, Mr Raja has also told the PM that despite his ministry’s decision to continue with the first-come-first-served policy for awarding new licences, it would still be possible to accommodate many new players.

Apart from existing operators, the queue for licences is as follows: ByCell for five circles, Tata Teleservices (3), Idea (9), Spice (20), Swan (2) and Cheetah (14)—Reliance holds stake in Swan and Cheetah— HFCL (21), S Tel (22), Parsvnath (22) Datacom Solutions (22), Ruias-owned BPL mobile (21), Oswals (22), Unitech (8), Shyam (21) and Indiabulls (22).