2G spectrum auction flops; gets a meagre Rs 9,407 crore
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2G spectrum auction flops; gets a meagre Rs 9,407 crore

Last Updated: Thursday, November 15, 2012, 08:48
 
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2G spectrum auction flops; gets a meagre Rs 9,407 crore
New Delhi: The much-talked about 2G mobile phone spectrum auction on Wednesday virtually flopped with just Rs 9,407 crore being garnered in the process contrary to the high valuation estimated by the CAG in its damning report of the government two years ago.

The auction, which lasted just two days, got total bids worth Rs 9,407.64 crore, Telecom Minister Kapil Sibal told reporters at the end of the bidding, which was a far cry from the 35-day bidding for the 3G spectrum in 2010 that got Rs 67,719 crore.

The government was targetting a minimum of Rs 28,000 crore from the sale of 2G spectrum in the GSM band and the tepid response may upset its efforts to meet the revised fiscal deficit target of 5.3 per cent of GDP. Overall, the government had budget Rs 40,000 crore as revenue from spectrum sale this fiscal.

Sibal refused to comment on the CAG's estimation of Rs 1.76 lakh crore as the loss to the exchequer in giving away spectrum on first-come-first-serve basis in 2008.

In an apparent dig at the CAG, he merely said, "the facts are before the nation and quite clear."


Going by the 3G auction price, the current sale should have fetched Rs 1 lakh crore but "what we have got is Rs 9,407 crore... So this is a market and that is how it plays itself out."

None of the five companies bidding for the spectrum made any offer for pan-India airwaves for which the reserve price was set at Rs 14,000 crore, a rate considered high by the industry.

Sibal said in all 101 out of the 144 blocks of spectrum on offer got bids.

Metro cities of Delhi and Mumbai, which accounted for 40 per cent of the base price of Rs 14,000 crore for 5 MHz of 2G spectrum, drew no bids.

The government had put on auction more than half of the spectrum that was freed from Supreme Court in February this year cancelling 122 mobile permits issued by the then Telecom Minister A Raja to nine telecom companies in 2008.

The Comptroller and Auditor General of India (CAG) had in 2010 said Raja's decision to give away spectrum at rates fixed in 2001 had caused a presumptive loss of Rs 1.76 lakh crore to the exchequer taking the price garnered in the 3G auction as the benchmark.

The government thereafter fixed a base at a rate almost equivalent to the third-generation (3G) auction price.

Further, as the government has promised to refund the license free paid in 2008, the net gain to the exchequer may be almost nil.

Dismissing allegations that companies colluded with the government, Sibal said "We have done exactly what the courts asked us to do. Infact the court asked us to sell (spectrum at a minimum price of) Rs 18,000 crore, we brought the price down because we wanted to sell, we wanted companies to buy."

"If we had fixed it at Rs 18,000 crore in terms of what Trai had recommended, this (even Rs 9,407 crore ) would not have been fetched," he added.

Lamenting the mess in the sector, Sibal said, "the consumer has not benefited at all because the nature and the kind of investments that ought to have gone into the sector have stopped and the sector has been in debt."

As per the provisional result, Vodafone emerged as the biggest winner getting additional spectrum in 14 circles of Jammu and Kashmir, Assam, Himachal Pradesh, Uttar Pradesh (East), Uttar Pradesh (West), Madhya Pradesh, Gujarat, Haryana, Bihar, Kerala, Orissa, North East, Punjab and Kerala.

Its market competitor Bharti Airtel managed only in Assam circels.

Idea Cellular was the second biggest winner getting spectrum in 8 circles which included all the seven circles where its licences were cancelled and an additional win in Bihar where it licences were unaffected by the apex court order that cancelled 122 telecom permits in 2G scam.

Norway's Telenor promoted Telewings secured spectrum in 6 circles - UP East and West, Bihar, Gujarat, Maharashtra and Andhra Pradesh. The Supreme Court had cancelled 22 licences of Telenor's Indian joint venture.

Videocon got spectrum in Bihar, Gujarat, MP, Haryana, UP East and West circles.

None of the companies in fray bid for pan-India spectrum for which the reserve price was set at Rs 14,000 crore.

The tepid demand for 2G airwaves was attributed to high base price. The Telecom Minister indicated that high base price was fixed due to order of apex court in 2G scam case.

"The judgement of the court said procedure of the 3G auction is to be followed and we went to Trai. The Trai made those recommendations and Trai fixed it (pan-Indian spectrum base price) base at Rs 18,000 crore (for GSM) and for CDMA Rs 36,000 crore," Sibal said.

From January 1, 2013 the government has decided to levy auction determined price on spectrum held by existing telecom companies beyond initial amount of 4.4 Mhz of airwaves frequencies that were allocated to them alongwith licences.

The government earlier estimated it will be able to garner Rs 31,000 crore by levying one-time spectrum fee but it will have to rework its estimates as airwaves auction failed in 4 circles.

Besides, the companies that won spectrum in this auction have the option to pay only 33 per cent as upfront and rest of the payment in installments after moratorium of 2 years.

In addition, the government has promised to adjust entry fee of the companies who won spectrum. Companies who got pan-India licences in 2008 had to pay Rs 1,658 crore for it.

PTI






First Published: Wednesday, November 14, 2012, 19:19


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