Voda offers Rs 4k cr for extension of licences

Price offered is about a quarter of what the government had set as reserve price for the auction in March

Vodafone India has expressed its willingness to pay Rs 4,000 crore for the extension of licences in three key circles—Delhi, Mumbai and Kolkata — where its operating permits are coming up for renewal in November 2014.

In a letter dated June 18, to the secretary of the Department of Telecommunications (DoT), Vodafone India resident director (regulatory affairs and government relations) T V Ramachandran said the company’s offer price was for the extension of the licences for 20 years, along with its current mix of spectrum and a flat spectrum usage charge of three per cent of adjusted gross revenue.

It has offered Rs 1,700 crore for Delhi, Rs 1,700 crore for Mumbai and Rs 600 crore for the Kolkata telecom zone.

The price offered is about a quarter of what the government had set as the reserve price for the auction in March 2013. In the 900 MHz band, Vodafone has a total of 23.8 MHz spectrum in the three circles. However, the government failed to get any bidder for the auction of the 900 MHz spectrum in March.

Vodafone has 8.5 million subscribers in the Delhi circle, 6.5 million in Mumbai and 4.2 million in Kolkata at the end of May 2013, according to data published by the Cellular Operators Association of India.

In his letter, Ramachandran noted the company is open to discussing the issue further to arrive at mutually agreed terms and conditions for extension as provided under the licence and as is also desirable for continuity of service and public interest.

Vodafone had, in December last year, sought extension of the three licences under Clause of 4.1 of the Unified Access Service licence agreement. According to Clause of 4.1 of UAS, the government can extend the licence period by up to 10 years if the operator makes a request in the 19th year of the licence period. Vodafone is in the 19th year of licence in all the three circles, where it wants its licence to be extended, it said in its application. DoT, however, had rejected the application. The government, however, has also given the operators an option to retain up to 2.5 MHz of airwaves under the 900 MHz band, if they wish to, by paying the price to be determined through the auction.

However, companies will have to bid for the auction even if they want to continue with just the retaining 2.5 Mhz.