Reliance edged out of latest cellular bids

By Sandeep Dikshit

NEW DELHI, JULY 11. Reliance Industries was today edged out of fourth round of bidding for cellular licences after bidding conservatively for most circles leaving Bharti, Birla-AT & T and the Hutchison-backed Barakhamba in the fray. In contrast to Reliance erring on the side of caution, Bharti and Barakhamba bid far more aggressively to emerge as the leading contenders in nine and four service areas, respectively.

Sources said the Government may earn at least Rs. 1,300 crores from the bidding process provided no company backs out after committing a certain amount of licence fees. In the final analysis, the amount expected to flow to the Central Exchequer will be far less, at least one-third, of the amount projected by Communications Ministry management.

Some said this was because of the uncertainty on the policy making front. Cellular companies were indecisive because they feared erosion in future revenue streams by WLL-based fixed service licensees. On the flip side, it was argued that there the low bids reflected the general mood of despondency in the global telecom market after some large companies burnt their fingers while bidding for 3G licences or in attempting to carve out synergies ahead of convergence of Internet, voice and broadcasting.

Although Reliable Internet promoted by Reliance was the cynosure of its competitors, the company repeated history by quoting low amounts. Reliance had bid very low amounts when cellular tenders had first opened in the mid-1990s while all other companies had made spectacular bids. In hindsight, Reliance's moderation was justified because other companies failed to submit their licence fees and were forced to move the Government for a change in licence fee payment norms. Reliance now has a realistic chance of bagging the licence only for Delhi.

Although Bharti emerged as the top bidder in as many as nine circles, the surprise packet of the day was Barakhamba Sales which is said to be backed by Hutchison of Hong Kong, a South India based entrepreneur and a steel magnate. Bids by the company in all the four circles - Chennai, Andhra Pradesh, Karnataka and Maharashtra - were above the Rs. 100 crore mark.

In contrast, only two out of nine bids by Bharti were above Rs. 100 crores. Indmobile solitary bid for Punjab was also at a high Rs. 105 crores.

According to the new format, bidding will take place in several stages. The lowest bidder in the first stage, which was held today, gets eliminated while those left in the fray qualify for the second stage where they are asked to match the price quoted by the highest bidder.

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Section  : Business
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