Taking a cue from big shopping malls and retail industry, telecom industry too has joined the sale mania. Well the commodity offered for sale and the target customers in this sale are different from retail sale. Like any other sale, this one too has free component built in it but the free component in this sale is a scarce resources which can not be bought otherwise. TRAI is offering pan India operation license to applicants @ Rs 1700 crore which is considered as the entry free. Along with this entry license, a GSM operator will be given 4.4 MHZ 2G spectrums and CDMA operators 2.5 MHZ absolutely free. This is a great deal and that is why it is attracting buyers across the industry. From Videocon, JSW steel, DLF, Unitech, Indiabulls Real Estate, Parsvnath, Omaxe to diversified group Hinduja, every big corporate house of India is into this mad race.

Around 200 applications have been received so far and this has taken TRAI by surprise. Earlier there was no closure date for this sale but this mad race for entry into Indian telecom market has resulted in restricting the last date of application to October 1.The question that might be troubling you – what is so special about this sale that it has so many takers?

India telecom industry is adding 8 million subscribers every month and is the fastest growing telecom industry in the world. Furthermore, the teledensity in India is still hovering around 21% and there is a lot of scope for penetration. The intention of all these applicants is clear. They want to build the network by jumping into foray and grabbing the spectrum before it gets into the hands of others. The spectrum which will be offered free with license fee is a hidden treasure and the companies venturing into it can sale it after initializing the process of setting up network to any prospective buyers. My gut feeling says that all these companies filing for entry into telecom business will sale the business at a premium after setting up the network. To run a full fledged show against telecom giants like Vodafone and Airtel who are already into market since long will give a tough time to new entrants. So, the idea is to grab the scarce resource and sale it at a premium in future. I don’t think they are willing to remain in this business for long because the cream target consumer is already grabbed by Airtel, Hutch, Reliance, TATA and other existing players.

Real estate developers like Parsvnath, DLF are having an innovative idea and they are coming with a different purpose. They are into the business of setting up SEZ which will have around 200 flats each. So, they can capitalize on their customers by bundling the telecom services with real estate business. This will give them an edge over existing telecom operators.

With this sale, one thing has become quite clear, it is raining money for TRAI, stiff competition for existing players and cheap services for the consumers are in waiting.

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