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Corporate Aug 7, 2012

Why is CDMA spectrum priced 1.3 times more than GSM, asks Sistema Shyam

By Sindhu Bhattacharya

Sistema Shyam, the only pure play CDMA operator, today strongly criticised the government's math on reserve price for upcoming auctions in the 1,800 mhz (2G) and 800 mhz (CDMA) bands. Its contention? There is no rationale for pricing 800 mhz spectrum at 1.3 times the price of 1800 mhz when it is not even being liberalised.

The Department of Telecom has made it clear that 1,800 mhz spectrum available henceforth will be liberalised - it can be used to offer any services - but has remained silent on whether 800 mhz is also liberalised.

Already, the other CDMA operators (who are also present in the GSM market) such as Reliance Communications and Tata Teleservices are reducing their exposure to CDMA and making investments primarily in the 2G space, leaving Sistema as the sole serious player in the CDMA space.

Vsevolod Rozanov, President and CEO, Sistema Shyam TeleServices (SSTL) said in a statement today that "Given the realistic sectoral environment and market dynamics, I believe that the reserve price for spectrum as approved by the cabinet is excessively high. There is no rationale to support why the 800 Mhz CDMA spectrum should be priced 1.3 times more than the GSM 1800 Mhz spectrum. It is significant to note that the GSM spectrum being put up for auction is liberalized whereas the 800 Mhz CDMA spectrum continues to be non liberalized."

t is significant to note that the GSM spectrum being put up for auction is liberalized whereas the 800 Mhz CDMA spectrum continues to be non liberalized. Reuters

Sistema has already filed a curative petition in the Supreme Court challenging cancellation of all its 21 licenses except Rajasthan. It had contended that since there was no "queue" for CDMA licenses in 2008 when licenses were awarded to it, there is no question of Sistema having benefitted from former telecom minister A Raja's first come, first serve policy.

Sistema, which is a joint venture between Sistema of Russia and Shyam Teleservices, has 16 million CDMA subscribers in India as on date and till now has never spoken of withdrawing from the Indian market where it has already invested $3.2 billion.

Rozanov said the auction price for 800 mhz airwaves should remain at Rs 1658 crore.

by Sindhu Bhattacharya

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