Telecom Panel Insists on INR100 Crore Net Worth to Bid for Spectrum Auction

Published By : 05 Jan 2015 | Published By : QYRESEARCH

It is getting increasingly difficult for Tata Teleservices Ltd (TTL) and Aircel to bid for the upcoming spectrum auction with the inter-ministerial committee (IMC). The reason for this inability to make a bid is the committee’s decision of only letting the companies with sound balance sheet bid. The committee has made it quite clear that, only companies whose net worth is more than INR100 crore will be able to participate in this auction. This decision is irrespective of whether the interested companies hold a license or spectrum or whether they are new entrants in the league. Spectrum auction for areas such as J&K and North East, the decided net worth is fixed at INR50 crore.

The reason for such a stubborn stance is telecom panel’s belief that sound balance sheets will ensure a good roll out of quality telecom services. According to G Krishna Kumar, a telecom professional from Bengaluru stated, IMC’s stand in inviting only financially strong players is justified. However, he further added that IMC also needs to consider that present economy has drastically brought down the net worth of many companies.

He elaborated his statement with BSNL’s example. He stated, though BSNL sports a positive net worth the company does not provide a good quality of service. In his opinion government should instead focus on making more spectrum available and reducing the tough competition that exists in the present market scenario. To reduce competition and pricing government must look at offering more than 20% spectrum and encouraging mergers and acquisitions, which is not only help the industry but the consumers too.
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