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India approves starting price for spectrum auction

06 августа 2012

The Indian cabinet Friday announced a long-awaited decision on the starting price of an auction to allot telecommunications bandwidth.

For services using the global system for mobile communications technology, the auction will start at 140 billion rupees ($2.51 billion) for a 5.0-megahertz slot covering all of India's 22 telecom service areas, a federal minister told reporters after a cabinet meeting.

The base price for bandwidth to offer services using the code division multiple access platform has been set at 1.3 times that for GSM -- or about 182 billion rupees -- added the minister, asking not to be named.

In 2008, companies paid a fraction of these starting prices, or about 16.58 billion rupees for 4.4 MHz of bandwidth that came bundled along with licenses.

The announcement of the starting price is crucial for companies such as Norway's Telenor ASA and Russia's Sistema JSFC and other companies which had their telecom licenses cancelled by India's Supreme Court earlier this year.

The court had cited corruption in the allotment of the 122 licenses in 2008 in a case which blew up to be India's biggest-ever corruption scandal.

The court had also instructed the government to hold an auction by Aug. 31 to reallocate the spectrum which would be surrendered by the companies affected by the order.

The affected companies have been allowed to operate under the cancelled licenses until Sept. 7, but they will need to buy bandwidth through the auction to continue services.

The licenses held by the local ventures of Telenor and Sistema -- which entered India by buying majority stakes in companies that got permits in 2008 -- were cancelled as well.

Among local companies, Idea Cellular Ltd. will have to stop services in at least seven of the 22 service areas it currently operates in unless it gets bandwidth through the auction.

The starting price has been one of the most contentious issues about the proposed auction. Companies like Telenor have earlier said they may close their Indian operations if the price is too high.


Источник: Total Telecom

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