The Government may allow incumbent players to bid for only one slot of 1.25 Mhz spectrum in the upcoming 2G auction. There will be no such cap on new players taking part in the auction.
According to the auction plan being finalised, there will be at least 8 slots of 1.25 Mhz each up for grab. Even if four of the top incumbent players grab a slot each, there will be four more slots available for new players.
This opens up the door a wee bit for new operators as they will be permitted to buy a minimum of two slots each, according to the decision taken by the Empowered Group of Ministers at its meeting on June 5. In addition, the new entrants can buy one more slot.
Top Government officials said that the auction rules were being made keeping in mind the new players whose licences have been cancelled by the Supreme Court.
While most of the new operators have already shut shop, Telenor-backed Uninor and Russia's Sistema continue to offer services. The two companies have said that they will participate in the auction if the rules are conducive.
If the Department of Telecom manages to get the Defence to vacate additional 55 Mhz of spectrum, then at least two new players can hope to get start-up spectrum even after incumbent players take up the other slots.
According to industry watchers, most of the operators that have lost licences may bid selectively leaving out non-profitable circles. “Some of the new players may use this opportunity to shed unwanted circles. Having operated in the country for over a year they would be better equipped to determine where they want to play. It is unlikely that anyone will go for a pan-India presence,” said one of the new operators. The players also have another advantage because all spectrum bought in the auction will be liberalised. This essentially elevates them from being a 2G player to being a 4G operator.
But a clear strategy would emerge only after the reserve price for the auction is determined.