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Government Allows Foreign Mobile Companies To Bid Separately In The Upcoming 2G Auction
The upcoming auction for the 2G Spectrum allocation could see foreign telecom companies acting alone. The Indian Government has given the green signal to allow international mobile service providers to participate in the bidding process independently.
So far, the companies had to mandatorily have an Indian or domestic partner to even consider entering the Indian market. However, the latest amendment has scraped this, as a pre-requisite. Though the companies can bid alone, they will have to eventually hunt for a domestic partner to continue operating in India. The upcoming ‘Information Memorandum’ that will be circulated to all interested parties, will include the clause making it mandatory for the companies to find a Indian partner within 90 days of successful bidding process.
By aripeskoe2 [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
The seeds of such an amendment were sown much earlier & Telenor stood to gain the most. The Norwegian company has been involved in a bitter spat with its Indian partner Unitech. Both operate the Uninor brand. Though successful, the telecom Joint Venture (JV) has witnessed a bitter case of sibling rivalry as Telenor feels Unitech betrayed it. But Unitech too is perhaps helpless owing to constant policy amendments which many feel are counter-productive to the development of the telecom sector. As a last resort, Telenor had decided to auction its own stake in the company & strive to have a higher stake in the same. But, this amendment could be just the impetus needed by Telenor to completely stand apart & bid without needing Unitech’s assistance at all. Telenor could even indirectly succeedin getting its 74% + Unitech’s 24% stake in Uninor!
This auction for the oldest technology for communication in the mobile world has witnessed companies going down & out. However, this policy change may turn out to be a silver lining for mobile companies, who, despite international reputation, suffer while playing in India. Such auctions, especially which have a national impact, often take a long time to formulate, conduct & execute with transparency. If the foreign companies are not forced to find a partner first & bid later, they can concentrate on the business end. Additionally, successful bidders will have domestic companies approaching them, instead of the other way around.
However, with this kind of independence, Indian telecom companies could witness the upper-hand of such multi-nationals as they will call the shots now. Should India allow foreign telecom companies to own & operate a 100% owned company without the need to hunt for a domestic partner?
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2012-08-16 08:12:49
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