Government to allow foreign telcos to bid alone in 2G spectrum auctions

NEW DELHI: The government has decided to allow foreign companies to bid in the upcoming 2G spectrum auctions on their own without a domestic partner, hoping to ensure higher participation in the process that could yield it much-needed revenues.

While the rules governing the telecom sector prohibit foreign firms from owning more than 74% of an Indian telecom company, the authorities will not insist on it as a pre-condition to participating in the bidding, a senior official in the department of telecom told ET.

Successful bidders are likely to get a 90-day window to induct a domestic partner and comply with the sectoral cap, the official said, adding this will be included in the Information Memorandum that will be circulated to all interested parties.

The memorandum, an official document listing all auctions rules, will be released on August 27.

For many overseas telecom firms, the upcoming auction could well be the last opportunity to foray into the country’s mobile sector.

It is especially crucial for firms such as Norway’s Telenor, which is keen to operate in telecom but is locked in a bitter dispute with its present partner, real estate firm Unitech, and wants out of the relationship.


Telenor said this week that it saw “no future for the partnership with Unitech” and intended to establish a new company with a new Indian partner. It hoped this new company would become a platform for it to participate in the spectrum auctions.

In India since 2008 and operating under the brand name Uninor, Telenor was one of the worst affected by the February 2 Supreme Court judgement that cancelled 122 licences issued by former telecom minister A Raja using a controversial first-come-first-served policy.

In that judgement, the court had ordered the government to issue new permits through auctions, much like the 3G and broadband wireless spectrum auctions of 2010.

“Since companies were permitted to bid without an Indian partner during the earlier auctions, we have decided to extend this option again to ensure that the government is in compliance with the SC order,” the telecom department official said.

After the broadband wireless auctions of 2010, the government gave US-based chipmaker Qualcomm, which won airwaves in four circles for about Rs 5,000 crore, a six-month window to bring down its stake to 74%. But the process took close to two years and also saw Qualcomm drag the telecom department to court to get its permits. This time around, the government is determined to not let matters drag on like the Qualcomm incident and plans to have a fixed timeframe for foreign firms to rope in Indian partners, the DoT official said.

The government is hoping that interest among international players to participate will be high as this auction may well be the last of 2G spectrum.