Technology

2G spectrum auction receives less than Rs 100 billion bids

NEW DELHI: Unlike the enthusiasm seen during the auctions of 3G a couple of years earlier, the auction of @G telecom spectrum received less-than-expected response and the government received just over Rs 94.07 billion against estimated Rs 280 billion.


The government had received Rs 677.19 billion in the 35-day bidding for the 3G spectrum in 2010.


The government has budgeted Rs 400 billion as revenue from spectrum sale this year.
Speaking after the auction was over, Telecom Minister Kapil Sibal refused to comment on the CAG‘s estimation of Rs 1760 billion as the loss to the exchequer in giving away spectrum on first-come-first-serve basis in 2008.


Going by the 3G auction price, the current sale should have fetched Rs 1000 billion but "what we have got is Rs 94.07 billion... so this is a market and that is how it plays itself out," Sibal said.


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 140 billion, a rate considered high by the industry.


Sibal said the government received bids for 101 out of the 144 blocks of spectrum on offer.


Metro cities of Delhi and Mumbai, which accounted for 40 percent of the base price of Rs 140 billion for 5MHz of 2G spectrum, drew no bids.
The concentration of the bidders appeared to be on select areas such as Gujarat and Uttar Pradesh (East), and there were few bidders for the key telecom circles of Delhi, Mumbai, Rajasthan and Karnataka.


India is divided into 22 telecom circles. Companies can bid for circles that remain unsold in the initial rounds. One estimate had earlier said the government may get only about 40 per cent of the Rs 400 billion it expected to raise from the auctions.


There was little interest so far perhaps because the base price for 5 MHz of GSM radiowaves or spectrum in all the 22 zones is more than seven times compared to 2008.


Bharti Airtel, Vodafone, Idea Cellular, Telenor and Videocon are bidding for GSM, but there are no bidders for the CDMA spectrum after Tata Teleservcies and Videocon pulled out of the race. Bharti, Vodafone and Idea Cellular along with Videocon and Telenor are participating in the GSM auctions, and none of them bid for pan-India airwaves.


In its judgment of 2 February this year, the Supreme Court had declared illegal and quashed the licences granted to the telecom firms on or after 10 January 2008 pursuant to two press releases issued on 10 January 2008 and subsequent allocation of spectrum to the licensees. The direction became operative after four months.


The Telecom Regulatory Authority of India was asked to make fresh recommendations for grant of licence and allocation of Spectrum in 2G band in 22 Service Areas by auction, as was done for allocation of spectrum in 3G band.


The Central Government was asked to consider the recommendations of TRAI and take appropriate decision within next one month and grant fresh licences by auction.

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