3G licensing is a massive lobbying by Indian Foreign Telcos. There have been some changes to the original policy and the highlights are as stated below. [Italics – Old Policy]
- CDMA Players will now have to bid in the auction process for 3G spectrum [Earlier they were assured of spectrum if they could match the winning bid]
- 1% of incremental revenues coming from 3G services only, to be payable after a period of one year. [Earlier, 1% of Average Gross Revenues (AGR)]
- Favors Foreign Telcos: Telcos that do not hold a UASL license, but have experience in running 3G services, must give an undertaking (no additional money) to obtain the UASL to begin services. [Earlier, A foreign player had to gain UASL (Unified Access Service Licence), which means it had to pay Rs.16.5 bn and Rs.20.2 bn, license fee + 3G reserve fees even before the bidding begins]
- Mergers & Acquisitions: Foreign players who are successful in gaining 3G license can now acquire an existing 2G license holder without having to wait for 3 years. [Earlier, they had to wait for 3 years before they could acquire an Indian telco offering 2G services]
Over the next 4-5 years, new entrants in the Indian Telecom sector could aim to garner a significant market share and will be the disruptive forces causing the next phase of price wars and reducing the value of the entire pie for even existing players.