By Rumman Ahmed
BANGALORE--Norway's Telenor ASA (TEL.OS) and U.K.-based Vodafone
Group PLC (VOD) have expressed reservations over their
participation in an upcoming auction of telecommunications
bandwidth in India.
India plans to hold an auction of bandwidth in March as a
previous sale in November saw weak response with no bidders for
airwaves in several service areas. The government raised just about
a third of its targeted 280 billion rupees ($5.25 billion) in
November as several companies stayed away citing high starting
auction prices.
The government recently decided to cut the base price for the
auction in some service areas by 30% to attract bidders in the next
round.
But Telenor said unless the price is cut by at least half, it
will not bid for spectrum in Mumbai, where the company has
operations but where it lost its license to operate after a Supreme
Court order last year.
The court cancelled the licenses of several companies including
the local unit of Telenor citing irregularities in their allotment
in 2008. The court then asked the government to take back the
airwaves allocated under the canceled licenses and auction
them.
The affected companies are allowed to provide services under
their cancelled licenses until Monday, when the Supreme Court is
scheduled to hear a government plea on the next round of
auction.
Telenor got bandwidth in six service areas through the November
auction, and it can provide services in those areas even after the
court's deadline ends. It had not bid for Mumbai in November.
Meanwhile, Vodafone sought the withdrawal of recent government
guidelines to sell bandwidth.
In a letter addressed to Telecom Secretary R. Chandrashekhar
last week, the company said the guidelines violate the license
contracts it has with the government. It made the letter public
Wednesday.
According to the guidelines, companies like Vodafone and Bharti
Airtel Ltd. won't be reallocated their existing airwaves when their
licenses come up for renewal. They, instead, will have to acquire
airwaves through government auctions.
Vodafone said its license contracts have a provision to extend
their terms through mutual agreement. The company said it has
already applied to extend its licenses in Delhi, Mumbai and
Kolkata.
Its licenses in the three service areas will expire next
year.
Officials at the telecom department couldn't be reached for
comment.
Write to Rumman Ahmed at rumman.ahmed@dowjones.com
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