2G spectrum auction flops

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2G spectrum auction flops 2G spectrum auction flops
SummaryThis was contrary to high valuation estimated by CAG in its damning report of UPA govt.

recently postponed stake sale in large companies -- Rashtriya Ispat Nigam Limited and aluminium major Nalco. The Finance Ministry, however, had been maintaining that the disinvestment target of Rs 30,000 crore would be met.

The government will take a call on disinvestment of Nalco in January after the release of the financial results by the public sector company.

"The second quarter results are not representative of the company's valuation. In October, there is a little visible improvement. So, we decided that it will be good to do it in the third quarter," Disinvestment Secretary Mohammad Haleem Khan had said.

High price key reason for 2G spectrum failure: COAI

The telecom industry today blamed the poor response to the 2G spectrum auction on the high reserve price set by the government.

"First and foremost among the many causes, is the clear recognition that an artificially high reserve price that bore no congruence to market realities was the key reason for the failure," GSM industry body COAI said in a statement.

The second factor is that the majority of the bidders are actually operators who had lost their licences and are compelled to participate in the auctions despite the high prices and the limited availability, simply in order to sustain their customers, businesses and to protect their years of investments, it said.

"Finally, the limiting of spectrum available for auction, which contrary to the Supreme Court ruling (to auction the entire spectrum related to the quashing of the impugned licences), added to the sense of uncertainty and fear of irrational bidding for many potential bidders," COAI said.

The artificial scarcity created by holding back spectrum combined with the high reserve price dampened any enthusiasm for aggressive bidding by the operators, it added.

"The auctions have concluded on the exact note as predicted," Cellular Operators Association of India (COAI) said.

It had stated that the high reserve price would ensure that there would be limited players coming into the market to bid, and had also indicated that there would be extremely muted bidding with several circles that would have no bidders at all.

"The results of the auction clearly indicate that the reserve price was completely off the mark, with none of the interested operators also not pitching for the circles that they had committed to participate publically," Prashant Singhal, partner in member firm of Ernst & Young Global, said.

The government's plan of Rs 40,000 crore has fallen flat and they would now need

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