Pass on benefit of any spectrum price cut: Sistema to DoT

NEW DELHI: Russia’s Sistema has demanded that any cut in base price for airwaves in auctions should be extended to it, a move that may thwart the Centre’s efforts at slashing the reserve price for third round of spectrum auctions. Sistema-Shyam (SSTL), which offers mobile phone services under the MTS brand on the CDMA technology platform, is the lone participant in the second round of airwaves sale that begins on March 11.


The Centre was forced to restrict the upcoming spectrum auctions to just the 800 MHz band used by CDMA operators as there were no bidders for the other frequencies. The government had earlier planned to sell unsold spectrum in the 1800 MHz band from last year’s auctions in four circles — Delhi, Mumbai, Karnataka and Rajasthan — along with a portion of airwaves held by incumbent operators in the 900 MHz band, during the March 2013 sale.

The Supreme Court had directed the government last week to sell all airwaves vacated by companies whose permits were quashed by the apex court in February last year and the move has forced the government to go in for a third round of airwaves sales, the timelines for which are yet to be finalised.



“Our participation in the ensuing auction is with a clear understanding that the relative price band will not be disturbed. Fairness and equity warrants that in the event Government of India takes a decision to reduce the reserve price in any of the 2G bands, the benefit of the price so reduced be extended to Sistema-Shyam by way of refund, adjustment on the excessive price paid by SSTL,” the company said in a March 4 communication to the telecom department.

Sistema said the decision to participate in the March 11 auctions were taken with ‘huge pain’, as it had to ‘simultaneously decide on closure of operations in other circles’ where it decided not to play a part in the airwaves sale. “We had to shrink our footprint as the reserve price has been so steep and not making any economic sense. The decision to close some of these circles are primarily due to the high reserve price, causing inconvenience to customers, loss of jobs for direct and indirect employees, loss of capital employed, huge dent on the image of Sistema, directly impacting the MTS brand,” the company’s communication added.

Sistema’s communication comes even as the panel of ministers on spectrum headed by finance minister P Chidambaram is looking at reducing the base price for the third round of spectrum auctions. The empowered group of ministers on Wednesday decided that it would decide on base price for airwaves with regard to future auctions only after the conclusion of the March 11 sale.

Sistema further said that India was a highly competitive market and relative advantage or disadvantage in spectrum prices had huge financial impact on companies.