India’s regulator undervalues 2G spectrum by US$5.7 billion

India’s regulator has been accused by the finance ministry of selling 2G spectrum in January this year at one-quarter of the market value, thereby losing approximately INR250 billion (US$5.7 billion) in income in the process.

The Department of Telecommunications (DoT) awarded pan-India 2G spectrum in January to new licencees at what was alleged to be a price equivalent  to the price of the spectrum in 2001amounting to INR16.51 billion.

Norway’s Telenor could soon be investing in India, after executives held talks with new 2G licencees over the past few days.

The finance ministry had earlier opposed the move to sell 2G spectrum below market rates, saying the additional INR250 billion would have relieved as much as 60 per cent of India’s revenue deficit in a tough financial year.

“The fact that the companies that were awarded the 2G licences command such high valuations even without start-up spectrum, infrastructure or customer base, nine months down the road, demonstrates the huge error in judgement made by the government,” stated member of parliament, Nilotpal Basu.

Datacom Solutions, Unitech, Loop Telecom, S-Tel and Swan Telecom are some of the companies to have bought spectrum at the discounted prices, and it is believed they are currently being courted by Telenor, the world’s seventh largest telecoms company.

A team of executives from Telenor has been in India over the past few days to hold talks with new licencees over possible majority stakes, it has been reported.

Apart from Vodafone, European companies have not been able to enter the Indian market in recent years.

Telenor has a subscriber base of more than 143 million, with a presence in Denmark, Norway, Sweden, Ukraine, Hungary, Serbia, Montenegro, Russia, Bangladesh, Pakistan, Malaysia and Thailand.