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Indian Mobile-Phone Operators Won’t Get Free Spectrum

India will not give away airwaves along with the license to operate mobile-phone services under a new policy, Telecommunications Minister Kapil Sibal said.

Telephone airwaves will be sold at market rates and the regulator will suggest ways to calculate the price, Sibal told reporters today in New Delhi. Mobile-phone companies, including existing operators such as Bharti Airtel Ltd. and Vodafone Essar Ltd. that hold more than 6.2 megahertz of spectrum will have to pay the “market rate,” he said.

A scandal involving the sale of airwave licenses led to a corruption probe, the resignation of Sibal’s predecessor and stalled parliamentary proceedings last month. The Comptroller and Auditor General of India said in a November report that the government lost potential revenue after the airwaves were sold at lower-than-market rates.

An auction process to allocate and price airwaves is being considered, Sibal said today.

The Indian government received 123.9 billion rupees ($2.7 billion) selling companies wireless spectrum that were worth as much as 1.5 trillion rupees, the auditor said. The Comptroller’s calculation was based on the price of spectrum for so-called third-generation services auctioned in May.

Sibal took over the telecommunications ministry after Andimuthu Raja resigned on Nov. 14, two days before the auditor’s report was submitted to Parliament. Raja denied any wrongdoing. On Jan. 7 Sibal said the exchequer suffered a loss of about 170 billion rupees from the sale of second-generation airwaves, almost one-tenth of what the nation’s top auditor estimated.

To contact the reporters on this story: Santosh Kumar in New Delhi at sthakur10@bloomberg.net; Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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