India seen taking over a year to auction 2G spectrum

NEW DELHI Wed Feb 29, 2012 7:46pm IST

A man speaks on a mobile phone in front of a billboard of Uninor at a market in Ahmedabad February 6, 2012. REUTERS/Amit Dave

A man speaks on a mobile phone in front of a billboard of Uninor at a market in Ahmedabad February 6, 2012.

Credit: Reuters/Amit Dave

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NEW DELHI (Reuters) - India could take more than a year to auction second-generation radio spectrum, the telecoms secretary said, leading to more uncertainty for those carriers whose licences are set to be revoked in early June following a court order.

The Supreme Court ruled on February 2 that all 122 telecoms licences awarded in a scandal-tainted 2008 sale be revoked in four months and asked the government to redistribute the licences and radio airwaves through an open auction.

The eight carriers affected by the court ruling include the Indian joint ventures of Norway's Telenor (TEL.OL), Russia's Sistema (SSAq.L) and relatively older local companies Idea Cellular (IDEA.NS) and Tata Teleservices.

"Our estimate is that it would take approximately 400 days. Maybe it can be done a little faster. But our best estimate of this is around 400 days," R. Chandrashekhar, the top bureaucrat in the telecoms ministry, told reporters on Wednesday.

He said the telecoms ministry was conducting a "careful analysis" of the court order and was seeking legal opinion from government law officers.

But, it was not immediately clear whether the telecoms ministry would seek the court's permission to give more time to the carriers whose licences are being revoked.

The Telecom Regulatory Authority of India is working on guidelines for the auction and will give its proposals to the telecoms ministry which has to take a final decision.

Most carriers whose licences are being revoked want the auction to restricted to them, while market leaders including Bharti Airtel (BRTI.NS) and Vodafone's (VOD.L) Indian unit are looking to bid in the auction to buy additional radio airwaves to increase service quality.

Chandrashekhar said the government would decide by the end of this week on "legal steps" it needed to take after the Supreme Court order, but was not looking to challenge the cancellation of licences per se.

Indian rules allow affected parties to seek a review of any Supreme Court verdict within a month of the judgment. Affected carriers including Sistema's Indian unit and Tata Teleservices have said they would seek a review of the court verdict.

The dramatic court verdict to revoke nearly half of the existing telecoms permits came amid a probe into alleged corruption in the 2008 grant process. India did not auction the licences in 2008, instead issued them under a so-called "first come first served" policy.

The CBI has charged in the alleged scam a total 19 people and six companies, including a former telecoms minister, A. Raja, who presided over the 2008 licensing process and several high-ranking corporate executives. All accused in the case have denied any wrongdoing and their trial is ongoing.

(Reporting by Devidutta Tripathy; Editing by Aradhana Aravindan)

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