Government banks on auction, customer-centric moves for telecom sector

The government is banking on the second round of spectrum auction and customer-centric moves such as free national roaming to rebuild the telecom sector, impacted by controversies and court judgements that have shaken investor confidence.

The tremors of official auditor CAG's last year estimation of Rs. 1.76 lakh crore presumptive revenue loss to the government in the allocation of 2G spectrum continued to be felt in 2012 with Supreme Court cancelling as many as 122 telecom licences in February.

What followed was foreign investors either shutting shop or threatening to seek damages for the investments they lost.

Caught in the melee were lakhs of their subscribers who had benefited from telecom user charges coming down with increased competition.

To compound the woes, the auction for 2G spectrum freed from licence cancellations flopped as bidders shunned high reserve price the government had set based on the methodology used by CAG in determining the humongous loss.

The radiowaves not picked up at the auction are now being planned for sale in the second round this fiscal after the lowering of the base price with the hope of attracting bidders.

Minister of State for Communications and IT Milind Deora told PTI that government has tried to give a message of resetting and reviewing economic agenda for the country.

"At telecom sector level, I believe that people will have certain concern, there may some tinkering here and there but broadly there is consistency, continuity, clarity in what the policy framework going forward for the licensee (telecom operators) which is largest investor in the sector," he said.

The Minister said the new amendments to the policy may hit some and suit some, but decisions that government is now taking are long-term oriented and have clarity.

"Outlook for the sector, not just 2013 but next foreseeable future may be difficult, challenging. I am not denying it but (now has) clarity. I think this much clarity has not existed for long time in the sector," Deora said.

The year 2012 began in the lap of 2G scam with Supreme Court cancelling 122 2G licences and continues to reverberate and has taken away focus of foreign investors from it.

Post this judgement, UAE based Etisalat, Bahrain telecom firm Batelco and domestic company Loop Telecom announced to shut down their business in India. Russia's Sistema has warned to seek "billions of dollars" in damages from India if licence cancellation issue of its Indian telecom venture Sistema Shyam is not resolved in time.

Sistema and Russian Ambassador to India, Alexander Kadakin, have said that failure to resolve the SSTL case could threaten India's broader diplomatic interests with Russia.