8:55 AM -- The application for additional 2G spectrum by CDMA mobile operator Sistema Shyam TeleServices Ltd. , which offers its services under the MTS India brand, has been rejected by India's Department of Telecommunications (DoT), according to a report in the Economic Times.

The operator, which operates in 11 of India's service circles and has about 4 million customers, had been awarded 2.5MHz of spectrum in each of its circles, while rival GSM operators had been awarded 4.4MHz, as set out by the country's spectrum allocation directives.

Most of the operators (GSM and CDMA players) have been asking for more spectrum to help cope with the growing numbers of subscribers, but the process for awarding extra 2G capacity is currently in limbo.

Until March 2009, additional airwaves were awarded based on each operator reaching an agreed subscriber threshold, but a DoT panel recommended last year that additional spectrum should now be awarded following an auction process. This has been referred to the Telecom Regulatory Authority of India (TRAI) , which is yet to announce its recommendations. As a result, the additional allocation of spectrum is on hold.

The TRAI is expected to announce its recommendations on overall spectrum management and a review of license terms and conditions before the end of April, a move that, in turn, should lead to a new spectrum policy from the DoT. Depending on that policy, MTS India may get another chance to apply for additional spectrum.

What's clear is that all of India's operators are desperate for a clarification of the country's spectrum allocation rules, with operators like Uninor openly demanding a swift resolution. (See Interview: Rajiv Bawa, EVP Corporate Affairs, Uninor.)

Meanwhile, India's mobile sector is focused on the ongoing 3G spectrum auction, in which MTS India is not participating. At the end of Day 9, the price of a pan-India 3G license hit 60.7 billion Indian rupees (US$1.36 billion), only a slight increase from the end of Day 7. (See India 3G Auction: Day 7.)

— Gagandeep Kaur, India Editor, Light Reading