TATA and Aircel not allowed to bid for new airwave, how will DOT decision affect Aircel and TATA?

By February 25th, 2015 AT 1:29 PM

DOT has published the list of pre-qualified bidders for March 5th spectrum auction. TATA and Aircel will not be allowed to bid for new spectrum as both companies have declared negative net worth. They are only allowed to buy additional spectrum in circles where they already offering its services.

spectrum-bidders2015

In the list of pre-qualified bidders, Bharti Airtel has the highest net worth at Rs 73069.60 crores followed by Reliance Jio Infocomm Rs 23029.58 cores. Idea Cellular declared a net worth of Rs 19185.55 cores while Vodafone India declared only Rs 8258.80 cores. Reliance communications declared Rs 17022 cores and Telewings communications (Uninor) declared Rs 1052.89 cores. Both TATA Teleservices and Aircel has declared negative net worth of Rs 8985.13 crores and Rs 6668.61 crores respectively.

Also read: Spectrum Data Sheet 2015

As per the auction rules, an operator requires at least Rs 100 crores in net worth for it to be eligible to bid for new spectrum or circle. DOT has said Aircel cannot bid for airwave bands that it doesn’t already have in a particular circle. Similarly, TATA Teleservices has been restricted from bidding in Assam, North East, and Jammu & Kashmir. It also cannot “bid in such bands in the remaining service areas where applicant (Tata Tele) does not have spectrum in that service area”.

What is net worth?

Net worth is the total assets minus total outside liabilities of a company. Net worth is used when talking about the value of a company’s net economic position. If a company has negative net worth, this implies the company has more debts/liabilities than the total value of the company.

How will DOT decision affect Aircel and TATA?

Both companies cannot bid for 2100Mhz 3G spectrum in circles where it does not have 3G spectrum. TATA Teleservices cannot bid for 900Mhz in any circles and will not be allowed to bid for any spectrum in Assam, North East, and Jammu & Kashmir. While Aircel can bid for 900Mhz only in Assam and North East were they currently hold spectrum in this band. As for 1800Mhz 2G spectrum, both companies can bid only in circles where it currently hold 1800Mhz spectrum.

With this announcement, two important players are out of 2100Mhz and 900Mhz spectrum auction in most circles. This makes the fight between incumbent operators along with Reliance Jio, Reliance Communication and Uninor (Telewings). It is worth to note that Reliance Jio placed the highest earnest money deposit (EMD) of Rs 4,500 cores sending a clear message it will bid for most spectrum bands.

Do let us know by comments your opinion on DOT decision to disqualify TATA and Aircel from bidding for new spectrum.

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An IT professional who has got great passion for telecom. Has been closely watching Indian telecom space since 2009.

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