|How will Sibal price new licences|
|Friday, 14 January 2011 00:00|
At least 119 existing licensees are watching Kapil Sibal’s actions with trepidation. A similar number are watching Sibal’s moves with hope.
On November 29, Sibal announced the process to cancel the licences of 119 telcos on various grounds, from giving incorrect information to get licenses to not fulfilling the rollout obligations. If the companies do not give satisfactory replies to the show cause notices issued to them, they will be asked to surrender the licences they got in January 2008 at the same prices that were paid in the June 2001 auction.
Once this happens, as is likely for a large number of licences, the government will have extra spectrum with it. According to an affidavit it filed in the Supreme Court when STel argued Raja’s arbitrary cutoff of September 25, 2007 had affected it adversely, the government said there was nothing mala fide about its actions. It was true, it argued, that an October 1 deadline had been given to receive applications. The September 25 cutoff was just to process the first lot of applications; as and when there was more spectrum available, more firms in the queue would get licences – there are 343 firms still left in the queue to get licences.
So the government is committed to give the next lot of firms licences. But at what price will it give them? The same Rs 1,651 crore that is at the heart of the Raja scam? Theoretically, Sibal can hike the fee to several times this, but the firms who have to pay the higher price will all go to court, arguing the same level-playing-field and we-need-to-keep-consumer-tarrifs-low that Raja and Sibal have been arguing. Also, a hike in entry fees will look funny since Sibal has just been justifying the Rs 1,651 crore pricing.