* No bidder for GSM, Sistema unit interested in CDMA
* Carriers have said minimum GSM airwave bid price too high
* Airwave sale revenue crucial to rein in fiscal deficit
By Devidutta Tripathy and Aradhana Aravindan
New Delhi, Feb 25 (Reuters) - Sistema emerged as
the only operator bidding in an auction of airwaves in India, a
sign that the government may have to drop the reserve price of
remaining airwaves to attract interest, analysts said.
A government official said the Russian conglomerate's Indian
mobile phone unit was the only bidder for the auction, due to
take place next month, dealing a blow to the sale of airwaves
worth at least $7.9 billion.
Selling airwaves, along with sales of stakes in state-run
companies, is a crucial part of government plans to curb the
deficit. An airwave auction in November raised less than a
quarter of a $7.4 billion target set in the last budget.
One economist said it would be tough for the government to
meet its target to contain the fiscal deficit at under 5.3
percent of gross domestic product for the year ending in March,
with no bidder for the bulk of the airwave auction.
"This is a big disappointment for the (money) market," said
Rupa Rege Nitsure, chief economist at state-run Bank of Baroda.
Monday was the deadline for carriers to submit bids for the
three frequency bands that were to be auctioned starting March
11. On Thursday, India is due to unveil its budget for the next
fiscal year, beginning in April.
The auction of airwaves in two key frequency bands, which
are used by operators on the popular GSM technology and account
for about 85 percent of the total value of the airwaves, will
have to be scrapped as no company has applied to bid for those,
the government official told reporters on Monday.
The government will need to further cut the minimum bid
price for the 1800 megahertz frequency in the Delhi, Mumbai,
Karnataka and Rajasthan zones on the top of the 30 percent cut
it approved in December to revive interest in the zones that
found no takers in November, analysts said.
The government official declined to comment on a possible
cut in the reserve price, saying that would be decided by a
ministerial panel and the federal cabinet.
He said the telecommunications ministry would start
auctioning airwaves in the 800 megahertz band, where the Sistema
unit will win airwaves at the minimum bid price - already cut by
about half after no company bid for the band in November.
Sistema Shyam TeleServices, which saw its permits revoked in
21 service areas after an Indian Supreme Court ruling on a
massive licensing scam, last week said it would cease operations
in 10 of those zones and bid in select areas.
The company has not specified how many licences it would bid
for, but if it did bid for the maximum remaining airwaves in all
11 remaining areas, it would have to pay about $1 billion at the
reserve price, and would be allowed to offset about $300 million
it paid for earlier permits.
Leading carriers Bharti Airtel Ltd and Vodafone
Group Plc's local unit, which last week challenged the
government move to sell airwaves in the 900 megahertz band,
stayed away from the auction.
Both companies declined to comment.
The high price as well as the legal issues led to the
carriers shunning the auctions, Rajan Mathews, director general
of industry lobby Cellular Association of India, said.
($1 = 54.2000 Indian rupees)
(Addional reporting by Suvashree Dey Choudhury; Editing by