Spectrum Pricing – Kapil Sibal Led Government in Catch 22 Situation

DoT and Kapil Sibal in TroubleThe Multi-Billion Dollar Scam Scarred Congress Government and its Lawyer turned Politician, Minister of Communications, Kapil Sibal is in Trouble again. Mr. Sibal will enter books of Modern History covering the Massive Corruption for his famous Zero Loss Theory in 2G Spectrum Scam. Mr. Sibal is in trouble yet again for crossing the lines.

The Government now needs to sell residual spectrum [Spectrum of all cancelled licensees] in markets where some spectrum was already sold in the November 2012 auctions. This puts Indian regulator in a tricky situation and creates hurdles for it to lower reserve prices, in our view. If there are any reductions in reserve prices, it is possible that operators which participated in last year’s auction may claim similar discounts and this might adversely lower the spectrum sale proceeds.

Incumbent operators must add more spectrum, particularly in congested urban centres. However, clarity on critical regulatory issues such as spectrum re-farming clarity on payouts for licenses extension prevents them from participating meaningfully. Vodafone India (NR) did use the 2012 November spectrum auctions to add spectrum in the 1800 MHz band and it is possible that it will continue to do so.

All this mess is undoubtedly due to biased policies by the arrogant Ministers and Bureaucrats. Even after repeated suggestions to the TRAI / DoT to come up with clear roadmap for the Telecom Sector has hit a roadblock.