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Thomas K. Thomas

New Delhi, Aug. 14 Stung by the recently announced policy for third generation (3G) mobile services, a delegation of foreign telecom players has approached the Prime Minister’s Office seeking intervention for a review of the guidelines.

One of the demands made by the foreign players is to dilute the merger and acquisition rules to allow them to pick up stake in existing 2G mobile operators if they win the bid for 3G. According to the current laws, the Department of Telecom has put a three-year lock-in period on new 2G mobile players from selling out.

Global telecom operators, including AT&T, Verizon, NTT DoCoMo and Deutsche Telecom are interested in entering the Indian market.

Some of the foreign operators have told PMO that the guidelines for 3G auction were unattractive for any new player and, therefore, they may not participate in the bidding process. If that happens, the auction would be limited to existing players such as Bharti Airtel and Vodafone Essar, which would reduce the level of competition during the bidding and, therefore, result in lower revenues for the Government.

According to the 3G policy announced by the Communications Ministry, foreign players will have to cough up at least Rs 4,000 crore for acquiring spectrum. This includes Rs 1,650 crore for taking a unified access licence. In comparison, existing telecom players will have to pay a minimum of only Rs 2,020 crore.

Foreign players are also at a disadvantage because they do not get 2G spectrum along with the unified access licence. Existing players have been given between 4.4 Mhz and 6.2 Mhz after they were given 2G licence.

This means that even if a foreign player wins spectrum for 3G mobile services, it will be difficult for it to compete with existing players without 2G spectrum, which is essential to offer basic voice services.

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