The Hindu : National : S Tel raises spectrum offer

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Friday, Dec 28, 2007
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S Tel raises spectrum offer

Special Correspondent

CHENNAI: Aspiring telecom company S Tel Limited has once again upped the stakes in the race for spectrum. In a letter to the Union Minister for Communication and Information Technology A. Raja on Thursday, S Tel offered to pay the government a share of its prospective revenue, to the extent of Rs.13,752 crore over 10 years, over and above the existing spectrum charges based on revenue share.

This more than doubles the company’s initial offer of Rs.6,000 crore, made in a letter to Prime Minister Manmohan Singh on November 5. In addition, the company promised to maintain a tariff ceiling of 30 paise a minute for the next 10 years, for calls to a mobile phone anywhere in the country.

S Tel, which has applied for telecom licences in all 22 service areas, says that its new offer is in response to Wednesday’s announcement that the government would accept the telecom regulator’s (Telecom Regulatory Authority of India) recommendations. The TRAI had recommended that existing telecom operators increase their subscriber base two to six times, depending on the location, before they are granted additional spectrum.

In his letter, S Tel director Santhosh Robert said the company’s offer was aimed at proving that current telecom operators were receiving spectrum at a concessional rate to the detriment of consumers and the exchequer. “This is only to demonstrate how the valuable resource of spectrum is today a goldmine and any under pricing of it is not going to inure … the consumers, but the coffers of the cartel which has come into being…The recent controversy has substituted cartelisation for competition, which can be broken only by a new policy initiative. Our offer is aimed at facilitating this,” he said.

Robert, an S Tel spokesman, pointed out that after the company’s November offer, existing telecom major Bharti had put forth its own offer to pay Rs.2,650 crore for spectrum. However, he admitted that the government has not responded to its earlier offer.

To benefit all

Mr. Robert said that S Tel’s business plan shows that “increased use of spectrum brings in revenue on marginal costing basis.”

Therefore, the company expects to garner sufficient revenue despite its spectrum payment commitments to the government and tariff commitments to the consumers. “The key is whether you want to have reasonable profits or greedy profits…Our proposal balances the benefits to all stakeholders,” said the spokesman.

The company is promoted by Skycity Foundations and Mauritius-based Telecom Investments.

It has committed to roll out services within six months if it is allocated 6.2 MHz GSM spectrum in 900 MHz frequency band for all 22 circles and permitted to share active networks and infrastructure. It claims the backing of investors willing to immediately shell out Rs.10,000 crore as funding for a roll-out.

S Tel says it will have a rural and women-friendly focus. “One of the key principles of this company is that empowering Indian women can be done through mobile telephony. A mobile phone can give them financial and economic independence,” said a spokesman, who added that the company also intended to cover rural areas better than existing operators.

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