Stock market crisis may put off 3G spectrum auction

By SiliconIndia   |   Wednesday, 29 October 2008, 12:04 Hrs   |    1 Comments
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New Delhi: The government is likely to postpone the much-awaited 3G spectrum auction due to the current stock market crunch which has wiped off valuations in the telecom sector, reported Financial Chronicle.

"A substantial drop in the number of expected bids and the bid amount is likely to delay the auction," said a senior Telecom Regulatory Authority of India (TRAI) official.

He however said, "The downturn will not affect the existing players and their operations. But it will impact the bids they plan to put if the 3G spectrum auction takes place. If the auction happens in January as per TRAI's plan, many of the global telecom companies which were planning to bid for the spectrum will not, and the bids from Indian companies will also be far lower than what it could have been otherwise."

"The government intends to auction the 3G spectrum in December-January as it wants to finish the process much before elections get the kind of valuations Swan telecom got", he added. According to him the downturn will also affect the fund raising plans of telecom companies.

The official further added that the credit crunch would not impact the existing operators in their existing circles, but there seem to have been some kind of a slowdown when it comes to the orders being placed by these companies for the equipment required for telecom towers.

B.V. Raman, country head-India, CDMA Development Group mentioned that non-availability of liquidity would reflect in 3G spectrum bidding. The response for 3G spectrum bidding would have been better if the world had not seen recession," he said.

Moreover, Vodafone, one of the major telecom operators, has already requested to the Department of Telecom to postpone the 3G spectrum auction and more companies are also expected to request the government the same

"Valuations have certainly dropped in the telecom sector. The sector will face more trouble if the turmoil continues. The new companies will have to roll out operations within one year of getting licenses, otherwise the license will automatically be cancelled by the government," said a telecom analyst.

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