Bharti’s money for MHz changes game

Call it a variation of the poison pill defence. On Monday, Bharti Airtel offered Rs 2,650 crore to the government so that it could be given an additional spectrum of 4.4 MHz across India’s 23 circles.

With that, Sunil Mittal has taken Ratan Tata’s advice literally - that anybody wanting additional spectrum should pay for it (after having himself junked the suggestion at first cut).

But Mittal may have also done more - his offer could force Anil Ambani’s Reliance Communication to cough up serious money for the additional spectrum that the CDMA major needs to start offering services based on the GSM technology.

RComm wants 4.4MHz GSM spectrum released in each circle. Paying for spectrum will make expansion into GSM very expensive for RComm and for the small, non-serious applicants such as garment exporters and real estate developers who intend to be spectrum-squatters.

Also, it would not be out of place to quote Don Corleone here: Money-for-spectrum is an offer the government may not be able to refuse given the political ramifications.

In a letter to D S Mathur, secretary, Department of Telecommunications (DoT) on Monday, Bharti Airtel joint managing director Akhil Gupta said, “Considering the urgency of the matter for us to attend to the quality of network needs of the customers, both present and the massive future growth, we herewith offer a sum of Rs 2,650 crore, which is approximately Rs 1,000 crore over and above the current charge of a pan-India start-up spectrum of Rs 1,650 crore.”

Recently, CDMA major Reliance Communications was given permission to offer GSM services after the company paid Rs 1,650 crore towards dual-technology licence.

According to Gupta, the Rs 2,650 crore should be considered as Bharti’s initial bid for pan-India spectrum of 4.4 MHz.

“We would like to reserve the right to increase this bid in the event of an auction for such a pan-India GSM spectrum allocation….”

Even as Bharti has been making joint presentations along with other GSM players like Vodafone Essar and Idea Cellular, to the DoT on spectrum allocation norms, no other operator has made any monetary offer to the government for additional spectrum.

Other GSM players were not available for comment. However, industry sources said the GSM view is that “no single company should own two licences while others are restricted to one.”

The sources also said the Bharti offer may lead to “debate on the absurdity of the situation.” At the moment, however, the telecom industry is in the midst of intense dispute and headed towards litigation, an analyst said.

RComm has reacted to Bharti’s offer letter to the DoT, saying that “Bharti is not entitled to second GSM licence in any condition.”

Also, GSM operator, Aircel, has filed a petition in the dispute tribunal TDSAT, seeking directions to DoT to allot start-up spectrum for launching services in new circles. Recently, Aircel had pulled out of the petition filed by Cellular Operators Association of India (COAI) against the government allowing use of dual technology.

It is believed that Aircel had pulled out of the COAI petition because it didn’t want to get caught in litigation and thereby lose the chance of getting licences for new circles.

Aircel is awaiting licences for 14 circles, while it operates in nine. Meanwhile, CDMA player Tata Teleservices on Monday filed a petition in TDSAT seeking a direction to DoT to get back the excess spectrum held by GSM operators beyond the contracted 6.2 MHz. In a related development, sources pointed out that GSM player, Idea Cellular, may not be immediately allotted LoIs for the nine circles for which it is awaiting nod, as it is party to a TDSAT petition filed by COAI.

LoIs are being readied for several other operators who had applied before September 25. However, there’s no official confirmation on this.

COAI said the expert committee headed by R Bandopadhyay, additional secretary in DoT, was not considering the views of the GSM companies.

Following that development, Bharti’s Akhil Gupta on Monday wrote to the DoT secretary, “We are disappointed at the outcome thus far where one can only conclude that there is a continuous move towards unjustifiably tightening the subscriber allocation criteria for the existing GSM operators.”

According to Gupta, the issue is headed for “a possible long litigation”. Gupta also wrote, “While attempts are being made to choke the GSM operators of their spectrum needs, the CDMA operators are being happily conferred additional spectrum beyond the highest entitlement.

It seems a bit odd that the CDMA operators, who have their full entitlement at 5 MHz of CDMA spectrum are now being proposed to be given additional 4.4 MHz of GSM spectrum.”

Gupta said that since additional amount being charged seems to be the only “plausible justification” for the government decision to allocate GSM spectrum to CDMA operators, “we are left with no option but to follow the same practice, albeit at a more realistic amount than what has been currently proposed.”