Govt can raise Rs 85,850 cr by selling 50% of defence airwaves

The telecom department (DoT) believes that the exchequer can get a minimum of 85,850 crore by selling just 50% of the airwaves the defence ministry vacates.

Its calculations are based on the assumption that about 20 MHz of second generation (2G) and an equal amount of third generation (3G) can be sold to mobile phone companies if the defence ministry was to free up these radio frequencies, according to an internal DoT note reviewed by ET. In total, the telecom ministry is seeking that the armed forces vacate up to 80 MHz of airwaves for commercial telephony.

The broadband wireless spectrum auctions in India last year delivered the government an unexpected bonanza of 38,543 crore ($8.25 billion), twice the amount predicted by analysts. The 3G and broadband spectrums jointly fetched 1,06,000 crore for the government against its estimates of 35,000 crore.

The telecom department's projections are part of its response to the defence ministry's latest threat that it will not release additional airwaves for commercial use. It also marks the first time that the department has put a value to the airwaves it is seeking from the armed forces.

Defence Minister A K Antony had recently told Finance Minister Pranab Mukherjee that the telecom department had failed to meet all timelines on building an alternative communication network for the armed forces, and warned that it could result in the services stopping all vacation of airwaves.

This is because, as per the MoU between both ministries, the armed forces were to vacate 25 MHz for 3G and 20 MHz for 2G. This will happen in a phased manner and will be linked to the completion of the alternative network that the DoT is building for the defence forces. Besides, the telecom department was also slated to set up an exclusive defence band and defence interest zone for the armed forces to keep its part of the bargain.

While the armed forces have already freed up 15 MHz 3G spectrum, which was sold during last year's auctions, and also vacated 15 MHz 2G spectrum, which has been allocated to new operators, the remaining airwaves - 10 MHz spectrum in 3G (for two operators) and 5MHz in 2G - will be released only after the alternative optic fibre network being built by BSNL is completed.

Analysts say the telecom department may earn more than their estimates if 20 MHz each of 2G and 3G airwaves are auctioned.

IDEA not happy with GOVT and POLITICIANS

Sorry for the late post but life is turning into a hell with Governance Deficit and Paralysis of Policies headed by one of the Weakest Prime Minister’s in our History.
In the Conference Call hosted on the 25th of Jan, Idea Cellular Management expressed their unhappiness over the Government’s reluctance to indulge Operators and various stake holders in talks. They hoped that the Minister will take inputs but my guess is he didn’t. I am not an advocate of Idea Cellular nor have any interest [direct / in-direct got nothing to do with them], but in the past 2 / 3 years they have repeatedly written to the Telecom Ministry and on some occasions even to the Prime Minister to come with a complete road map for the sector yet the the Puppet like Prime Minister chose to ignore their requests.
Idea Management also expressed the following views, [My Comments in Italics]

• There must be efficiency at National Level with Multidisciplinary committee
• Competition does not increase when operators go from 6 to 16
• As sector evolves, command and control must be market based. Regulator must be able to act freely [Regulator is to write regulations, some Regulators are influenced by their ex-chairman now working for Nira Radia.  Based on the kick-back the Politicians and Bureaucrats receive, rules of the game will be tweaked]
• Telecom cannot be governed by Media [Nira Radia / Barkha Dutt / NDTV] or Parliament [ ufff Politicians]. Special institutions must takeover and it should be evaluated on how they should be funded [Somebody like Nandan Nilekani should be asked to Head such a institution along with Academic Researchers]

The management which is taking directions from the toughest Chairman of the Aditya Birla group, Kumarmangalam, has been able to cut costs and increase efficiencies at all levels since they need to survive the major shakeout with just plain vanilla Wireless services. Some of the other things discussed in the call by the management are as follows,

• ARPU is higher than Telecom Sector’s Average.
• Mobile Number Portability will not be a game changer and Strong Brands will be net gainers
• 3G launch in 11 cities very soon and nationwide roaming arrangements in place.
• Idea’s network now carry 1 Bn minutes a day of Voice making it amongst the Top 10 operators globally in traffic
• Further CAPEX will depend and will be directly proportional to the profits and Cash Flow
• Idea Cellular has tied up with Axis bank to encash upon the m-commerce opportunity. RBI wants to get most of Indian Population into the banking stream and hence is utilizing the reach and network of Telecom companies. Regulations are evolving with respect to settlement, KYC, UIDAI etc. Idea thinks that m-commerce roll out is still 9 to 12 months away.
• Data Usage on Idea Network has shot up but no details were given due to competition.
• To a question on doubling of subscriber acquisition by Merrill Lynch Analyst, Reena Verma, the management didn’t give a satisfactory answer in my view and took shelter under the excuse of seasonality as the Analyst questioned, if their were any strategies the management had adopted, what was stopping them from being implemented earlier

And finally, the Telecom Sector is a mess which I don’t have to explain. I am not really excited to write a lot on this as the stake holders lack the attitude to move ahead in life and grow that you and I have. My priority is something else now, so if time permits, will share my thoughts source