Dull start to 2G auction, Rs 5,700 crore bids on Day 1
Nov 12 2012 , New Delhi
This figure stood in stark contrast to telecom secretary R Chandrashe-khar’s claims of having received bids worth Rs 9,200 crore for 98 blocks at the end of the sixth round of bidding.
The difference between the official claim and the data put out by the telecom department indicated waning interest among telecom companies on top of a lacklustre response to begin with.
In a communication to Financial Chronicle, Chandrashekhar insisted that the total worth of the bids received till the end of the first day of auctions stood at Rs 9,224 crore.
If the auctions were to continue along these lines, they would be over even before they would have begun.
Sunil Mittal, chairman-cum-group chief executive officer (CEO) of Bharti Group, had last week warned that “the auctions will be over on the first day itself.”
Lucrative metro circles like Delhi, Mumbai and Karnataka were among several that saw no expression of interest from operators. Bihar, Assam, Maharashtra and J&K circles saw some bidding activity and that saved the telecom department from the blushes.The government has put up for sale eight blocks of spectrum in each of the 22 circles, totalling 176 blocks of 1.25 Mhz each in the 1800 Mhz band. There are five GSM players bidding for spectrum in that band. While Bharti Airtel and Vodafone have chosen to opt for top-up spectrum in select circles, Telenor, Idea Cellular and Videocon seem to be bidding to regain the licences that were quashed by the Supreme Court in February 2012.Auctions for CDMA spectrum in the 800 Mhz band had to be called off after Videocon and Tata Teleservices, the only two participants, withdrew from the race. CDMA spectrum was to be auctioned at the end of the 1800 Mhz auctions.High reserve prices have been cited as the biggest reason behind the tepid industry response. However, that is not the only reason forcing telecom players to keep away. Incumbent GSM players like Bharti Airtel, Vodafone and Idea hold spectrum in the 900 Mhz band and would have to vacate their holdings in that band when their licences come up for renewal beginning 2014.These operators would be required to buy spectrum in the 1800 Mhz band in lieu of their holdings in the 900 Mhz band at prices determined by the ongoing auctions. If these auctions were to end close to the reserve price, it would work to the advantage of the incumbent GSM operators as they will be able to pick up spectrum at relatively lower rates. Rajan Mathew, secretary general of the Cellular Operators Association of India (Coai), said: “We will now have to revise the earlier estimates on tariff and its impact on the industry.”Mathew maintained that “no or poor participation in the bidding presents a second opportunity for the government to price spectrum more judiciously.” Hemant Joshi, partner at Deloitte Haskins & Sells, said, “Less activity in the bidding goes in favour of the industry.” A damp squib of an auction can cause considerable embarrassment to the government and throw its fiscal calculations into disarray. The government had hoped to mop up close to Rs 40,000 crore in non-tax revenues from auction proceeds and one-time fees. While one-time fees would net the government close to Rs 31,000 crore, a question mark now looms over its exact receivables from the proceeds of the auctions. firstname.lastname@example.org