Vodafone makes offer in India licence logjam

Vodafone makes offer in India licence logjam

02 JUL 2013
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Vodafone India has broken ranks with peers Bharti Airtel and Idea Cellular in order to escape an impasse over the renewal of 2G licences in three key regions, according to the Economic Times.

Apparently, Vodafone has offered to pay INR40 billion ($670.9 million) to the government to renew permits in Delhi, Mumbai and Kolkata. It would also pay a spectrum usage charge equivalent to 3 per cent of adjusted gross revenue.

This assumes a discount on the reserve prices for a spectrum auction that was scheduled to take place in March 2013, but which failed due to a lack of bidder interest. However, Vodafone is believed to have suggested that if the next round of auctions yield a higher price, it will make up the difference.

India’s auditor has claimed that the country’s operators acted as a cartel in not participating in the earlier auction, and had caused a financial loss to the country’s government.

Vodafone’s licences are due for renewal in November of next year. With the licences of other operators also set to expire in the not too distant future, Vodafone’s actions are seen as setting an important precedent for the other privately owned operators.

According to the Financial Times, Vodafone believes that the terms of the existing licence provide for an automatic extension on terms to be agreed with the government, while the authorities are arguing that Vodafone must bid in an open auction.

The FT also said that Vodafone is open to negotiation, and that some observers had said the current offer is unlikely to win over the government.

Vodafone India has already filed a petition with the Delhi High Court relating to the 2G licence renewal process.

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