Bharti spectrum offer rings in counter-claims

Many new players have challenged the offer by Bharti Airtel to pay Rs 2,650 crore to get a start-up GSM spectrum of 4.4 MHz.

While some say they will up the ante and are planning to write to the government that they can offer more, others say the offer is meant to keep away new competitors.

Bharti, in a letter to the government yesterday, had offered to pay Rs 2,650 crore for a pan-India GSM spectrum of 4.4 MHz, which is Rs 1,000 crore more than what GSM players pay for an all-India licence.

Many leading players like AT&T, Parsvnath, Unitech, Sistema and HFCL have applied for unified access services licence (UASL).

There are others who say GSM operators should first pay for the spectrum they have received beyond the contracted amount.

"They should first first pay for the extra spectrum that they have taken. Why should we pay extra as what we are asking is within the policy framework?" said HFCL Chairman Mahendra Nahata.

Ajay Singh, an investor in one of the new applicants, said, "What Bharti is suggesting is that only a few players should operate. Now they will pay for spectrum so that the new players cannot get it."

Even analysts argue that the Bharti offer, which will fetch the government an additional Rs 5,000 crore (if all five GSM operators pay this much extra), is not attractive enough. Most believe auctioning will fetch the government at least two to four times the price.

Says telecom expert Mahesh Uppal: "The method of fixing the price is arbitrary and does not reflect the market value of spectrum. Trai has suggested a method, Bharti has suggested another and Reliance Communications has opined that one should pay even less than Rs 1,650 crore. The only way to fix the real value is auction."

Meanwhile, in a letter to Department of Telecommunications Secretary DS Mathur, Idea Cellular Managing Director Sanjeev Aga said the company was willing to pay Rs 1,650 crore for a nationwide 4.4 MHz GSM spectrum licence.

Aga said they had been "long overdue" for spectrum in 10 out of 11 circles that they operate in.

The letter argued that while the last allocation was made to Idea a year and a month back, further spectrum was not allotted to the company though it was available with the government and their right "had therefore accrued".

According to highly placed sources, almost half a dozen letters have been written to the government in this regard.

"In many of these cases, our application was the first in queue, and spectrum was also available. It was required of the government to follow its own policy and issue letters of intent (LoI) in all such cases. It is hard to understand why this was not done," said an Idea executive

Reliance Communications (RCom) has also written to Mathur demanding that Bharti pay Rs 1,600 crore for the additional spectrum that it has got beyond the contractual obligation.

RCom says Bharti has received spectrum in many circles beyond the 6.2 MHz that has been given to it under its agreement with the government.

Reliance's figure is based on a pro rata calculation of spectrum based on Bharti's offer yesterday in which it has offered to pay Rs 2,650 crore for 4.4 MHz spectrum. It also includes finance charges of 10 per cent per annum from the spectrum received in excess of the contractual obligation.

The letter says the DoT can raise a demand of Rs 1,600 crore based on Bharti's own calculation.