2G spectrum auction ends in a whimper with less than Rs 10k-crore bids received

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SummaryThe 2G spectrum auctions ended on Wednesday with the government raising a Rs 9,407.04 crore against the budget estimate of Rs 40,000 crore.

The 2G spectrum auctions ended on Wednesday with the government raising a Rs 9,407.04 crore against the budget estimate of Rs 40,000 crore.

In stark contrast to the 3G spectrum auctions of 2010, which went on for more than a month and fetched R67,000 crore, this time round the auction finished on the second day. It had begun on November 12, when the government was able to earn Rs 9,224.75 crore. There was no auction on November 13 on account of holiday for Diwali.

Actual government revenues may be even less as the companies have the option of staggered payment wherein only 33% needs to be paid upfront. Further, for companies like Idea, Videocon and Telenor, the government would also need to adjust their entry licence fee of R1,651 crore paid in 2008.

Briefing reporters, telecom minister Kapil Sibal said he does not wish to comment on the CAG report as the facts of spectrum auction are before the nation.

“I do not want to comment on any institution but the facts are in front of the nation. The nature of the market in 2008, 2010 and 2012 are very different. It is very dangerous to extrapolate and take the situation in 2010 and apply in 2008 and similarly apply 2012 to 2008,” Sibal said.

Videocon and Idea won spectrum in seven circles while Telenor got spectrum in six circles. Bharti Airtel won in one circle while Vodafone got 14 circles.

Videocon, Idea and Telenor were the among operators which had lost their licences when the Supreme Court in February cancelled all 122 licences granted on January 10, 2008 by former telecom minister A Raja. While Vodafone and Telenor were new operators losing licences in all 22 circles, Idea an incumbent operator, had lost licences in seven circles which were not covered by it earlier.

The auctions dragged on due to some excess demand in circles like Uttar Pradesh (east) and (west) and Bihar, all C circle circles where the reserve price was low. Of the total 22 circles, bids were received in only 18 circles with four circles – Karnataka, Delhi, Mumbai and Rajasthan – the circles with high reserve price not drawing any bids. Barring Bihar, bidders got spectrum in all circles at the reserve price.

The government will now have to think of ways of selling spectrum in circles where there were no takers. Would it lower the reserve price? It already faces a similar

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