Supreme Court order set to hit DoT’s plans of refarming
NEW DELHI: The Supreme Court on Friday ordered unsuccessful bidders of 2G spectrum auction held in November to cease operations and make way for those who have won the new licences.
A two-judge bench of the apex court also directed the government to auction all spectrum vacated after its February 2012 order "without any delay". The court had last year revoked 122 licences held by nine telecom companies following the scandal over the allocation of 2G permits in 2008.
"Those companies which did not bid or those who made bids and lost will cease operations so that successful licensees can start," a bench of Justices GS Singhvi and KS Radhakrishnan said in a short order.
The Supreme Court's order is set to disrupt the telecom department's plans of refarming the 900 MHz band as DoT would have to put up all available 2G spectrum for the March auction.
The government had earlier said it would allow operators to keep a portion of airwaves in the more efficient 900 MHz band and refarm, or reallocate, the rest, replacing it with less efficient spectrum in the 1800 MHz band. Since all spectrum in the 1800 MHz band will be up for sale, as per the Supreme Court order, DoT may not be able to keep enough airwaves for refarming.
A senior DoT official, who did not want to be named, conceded that the court's order could 'potentially jeopardise' the refarming process if all 1800 MHz spectrum put up for auction gets sold.
However, the official added that such a situation may not arise. "In the November auctions, all spectrum that was put up for auction was not sold. So, there would be spectrum available in all circles," he said. "Plans to refarm the 900 MHz band would be off the table for now," said Rajan Mathews, director-general of the Cellular Operators Association of India, a GSM operator lobby.
"The government will have to determine the next steps regarding this band, and the industry will have to consider its legal options now that the SC has ruled 900 MHz does not fall under the ambit of the February 2 judgment," Mathews added.
The government had earlier decided to limit the sale to only 271 MHz, but the court did not take it kindly. The November auctions had turned out to be a damp squib even with limited airwaves on the block. The Centre had got less than a fourth of its revenue target of Rs 40,000 crore from the auction as there were no takers for 57% of the airwaves put up for sale.
The judges, however, exempted Sistema Shyam Teleservices Ltd, a joint venture of Russian conglomerate Sistema and India's Shyam Telecom, from the order (asking unsuccessful bidder to cease operations) since the company said it wanted to bid in the next round of spectrum auctions scheduled for March 11. The court had earlier said it may allow telecom companies that wish to bid in the next round of auctions to continue operations.
"We will pass separate orders for Sistema," Justice Singhvi said when the company's lawyer Vikas Singh, sought clarification on whether Friday's order will apply to his client.
The bench said telecom companies whose licences were cancelled but they continued operations under the court's interim orders will have to pay the reserve price fixed for the November auction. The judges also clarified that their order directing fresh auction of airwaves vacated by cancellation of licences did not cover the most efficient 900 MHz airwaves.
"900 MHz was not the subject matter," Justice Singhvi said. The bench said telecom companies, which had disputes over the 900 MHz airwaves, were free to approach other judicial and quasi-judicial fora such as TDSAT.
Existing 900 MHz licence holders had opposed any move to place this band up for auction. Industry executives said the court's clarification will not hit telecom companies hard since the department of telecommunications has already told the court that it will issue temporary licences to those willing to participate in the March auction.
The exemption given to Sistema Shyam came as a lifeline for the company, which would have otherwise been forced to shut operations in 21 of its 22 circles. The company, which offers mobile and data service under the MTS brand, had not bid in the November auctions, saying the reserve price of CDMA airwaves was too high. Even if Sistema is successful in the next auction, it will have to pay for airwaves from December 19 — the date applicable to winners of the November auction.
Sistema Shyam is the only telecom operator offering services exclusively on the 800 MHz band used to offer CDMA services, and has maintained that its case was different from the remaining GSM operators. The only other company that will be affected by Friday's order is Uninor, the Indian arm of Norway's Telenor. It will have to shut operations in the Mumbai circle, where it may buy spectrum in the next auction.
The company, however, did not comment on this. "Uninor wishes to clarify that this order will have no impact on its operations and services in the six circles of UP East, UP West, Bihar andJharkhand, AP, Maharashtra and Goa and Gujarat, since it has already secured fresh spectrum for 20 years in these," Uninor said.
A two-judge bench of the apex court also directed the government to auction all spectrum vacated after its February 2012 order "without any delay". The court had last year revoked 122 licences held by nine telecom companies following the scandal over the allocation of 2G permits in 2008.
"Those companies which did not bid or those who made bids and lost will cease operations so that successful licensees can start," a bench of Justices GS Singhvi and KS Radhakrishnan said in a short order.
Hours after the ruling, a DoT official said it may put up the entire 430 MHz airwaves freed after cancellation of mobile permits for auction in March. "Clarifications to this effect will be issued on Monday along with those related to the notice inviting applications for the March auctions," the official said.
The Supreme Court's order is set to disrupt the telecom department's plans of refarming the 900 MHz band as DoT would have to put up all available 2G spectrum for the March auction.
The government had earlier said it would allow operators to keep a portion of airwaves in the more efficient 900 MHz band and refarm, or reallocate, the rest, replacing it with less efficient spectrum in the 1800 MHz band. Since all spectrum in the 1800 MHz band will be up for sale, as per the Supreme Court order, DoT may not be able to keep enough airwaves for refarming.
A senior DoT official, who did not want to be named, conceded that the court's order could 'potentially jeopardise' the refarming process if all 1800 MHz spectrum put up for auction gets sold.
However, the official added that such a situation may not arise. "In the November auctions, all spectrum that was put up for auction was not sold. So, there would be spectrum available in all circles," he said. "Plans to refarm the 900 MHz band would be off the table for now," said Rajan Mathews, director-general of the Cellular Operators Association of India, a GSM operator lobby.
"The government will have to determine the next steps regarding this band, and the industry will have to consider its legal options now that the SC has ruled 900 MHz does not fall under the ambit of the February 2 judgment," Mathews added.
The government had earlier decided to limit the sale to only 271 MHz, but the court did not take it kindly. The November auctions had turned out to be a damp squib even with limited airwaves on the block. The Centre had got less than a fourth of its revenue target of Rs 40,000 crore from the auction as there were no takers for 57% of the airwaves put up for sale.
The judges, however, exempted Sistema Shyam Teleservices Ltd, a joint venture of Russian conglomerate Sistema and India's Shyam Telecom, from the order (asking unsuccessful bidder to cease operations) since the company said it wanted to bid in the next round of spectrum auctions scheduled for March 11. The court had earlier said it may allow telecom companies that wish to bid in the next round of auctions to continue operations.
"We will pass separate orders for Sistema," Justice Singhvi said when the company's lawyer Vikas Singh, sought clarification on whether Friday's order will apply to his client.
The bench said telecom companies whose licences were cancelled but they continued operations under the court's interim orders will have to pay the reserve price fixed for the November auction. The judges also clarified that their order directing fresh auction of airwaves vacated by cancellation of licences did not cover the most efficient 900 MHz airwaves.
"900 MHz was not the subject matter," Justice Singhvi said. The bench said telecom companies, which had disputes over the 900 MHz airwaves, were free to approach other judicial and quasi-judicial fora such as TDSAT.
Existing 900 MHz licence holders had opposed any move to place this band up for auction. Industry executives said the court's clarification will not hit telecom companies hard since the department of telecommunications has already told the court that it will issue temporary licences to those willing to participate in the March auction.
The exemption given to Sistema Shyam came as a lifeline for the company, which would have otherwise been forced to shut operations in 21 of its 22 circles. The company, which offers mobile and data service under the MTS brand, had not bid in the November auctions, saying the reserve price of CDMA airwaves was too high. Even if Sistema is successful in the next auction, it will have to pay for airwaves from December 19 — the date applicable to winners of the November auction.
Sistema Shyam is the only telecom operator offering services exclusively on the 800 MHz band used to offer CDMA services, and has maintained that its case was different from the remaining GSM operators. The only other company that will be affected by Friday's order is Uninor, the Indian arm of Norway's Telenor. It will have to shut operations in the Mumbai circle, where it may buy spectrum in the next auction.
The company, however, did not comment on this. "Uninor wishes to clarify that this order will have no impact on its operations and services in the six circles of UP East, UP West, Bihar andJharkhand, AP, Maharashtra and Goa and Gujarat, since it has already secured fresh spectrum for 20 years in these," Uninor said.
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