1. Telecom auction ends in virtual failure, raises 11 per cent of target

Telecom auction ends in virtual failure, raises 11 per cent of target

India's telecom spectrum auction ended in a virtual failure, closing within five days and raising only Rs 65,789 crore, about 11.6 per cent of the expected Rs 5.66 lakh crore.

By: | New Delhi | Published: October 6, 2016 9:38 PM
Telecom-Reu-L The failure has been attributed to the high reserve price decided by the regulator and approved by the central government. (Source: Reuters)

India’s telecom spectrum auction ended in a virtual failure, closing within five days and raising only Rs 65,789 crore, about 11.6 per cent of the expected Rs 5.66 lakh crore.

The failure has been attributed to the high reserve price decided by the regulator and approved by the central government.

“It is a failure to an extent. The largest chunk of spectrum didn’t find any buyers because of serious miscalculation by the regulator and the central government on the current market value of 700 MHz spectrum. They overpriced it and the players decided to wait till the price becomes more realistic,” said Mahesh Uppal, Director of Com First, a telecom consultancy.

A total 2,354 MHz of spectrum was put on block by the government for e-auctioning, but only 965 MHz were sold. The money raised on the first day, of around Rs 53,000 crore, was an early portent that not everyone was enthusiastic about bidding for the airwaves.

However, the Communications Minister, Manoj Sinha tried to put a positive spin on the money raised. “This is the highest ever amount garnered in the last five years. This is a cause of happiness. It’s a big achievement that we could sell 965 MHz, which is more than the cumulative amount sold since 2012,” the minister said.

The auction went through 31 rounds for seven bands –700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz.

The auction would also fail to help in fully realising the revenue target of Rs 98,994.93 crore that had been provided for in the budget for this year against ‘other communications services’ — the bulk of which is scheduled from the fee paid for spectrum.

The government expects operators to pay Rs 32,000 crore upfront for the spectrum, the minister told reporters after the auction was concluded.

The companies participating in the auction were Bharti Airtel, Vodafone India, Reliance Jio Infocomm, Reliance Communications, Idea Cellular, Aircel and Tata Tele — who together furnished total earnest money of Rs 14,653 crore.

The 700 MHz and 800 MHz went without any interest, as had been feared by the industry and experts owing to the high reserve price. “Since the 700 MHz spectrum is not usable now, it’s was a risk for the companies,” said Uppal.

The total amount of money committed through the auction will not immediately come to the government as the telecom operators have been given the option of both upfront and deferred payment.

India’s biggest telecom did not start too well Saturday with subsequent days seeing only marginal increments taking the amount to Rs 65,789.12 crore on the fifth day, when the auction had to be called off for lack of further interest.

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