After two years: Telecom sector hopes auction will signal revival

Feb 03 2014, 10:26 IST
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Govt expect the auctions to raise more than Rs 40,000 crore which will make the fiscal deficit for FY 14 attainable. Govt expect the auctions to raise more than Rs 40,000 crore which will make the fiscal deficit for FY 14 attainable.
SummaryFeb 2: Two years back, SCís licence cancellation order came on the same date.

the sector into grief. The companies had bid massively to raise Rs 1,08,000 crore for the government, especially as the department of telecom had in the run up announced there will be no further auction for a long time.

The bid prices were used by government auditor, the CAG to presume that any spectrum sold earlier at lower prices was consequently a loss for the government. To preclude these happening this time again, the telecom department has already announced schedules for next auctions in FY15.

Rajat Kathuria, former Trai technical advisor and now chief executive Icrier says the government has learnt from the tumultuous experience of the last two years. ďThe outcome of these auctions will as much be a test of whether the telecom sector sees the new conditions such as lower reserve price, lower and uniform spectrum usage charge and spectrum trading possibilities as positive as much as it will be a test of whether the endeavour to exorcise the institutional demons of the past has been credible,Ē he says.

Telecom Regulatory Authority of India (Trai) has this time set the base price 47 per cent lower than the price discovered in the 2010 auctions. This has been welcomed by all the bidding companies.

Among the 22 telecom circles of the country, the 12 top circles will be bid for by all the eight companies in the fray unlike the 2010 auctions where every company bid for everything on offer.

The auction rules are also flexible this time to allow the winners to use the airwaves for any type of telecom service they want to provide like data or voice telephony.

Essentially, the auctions will further consolidate the presence of the market leaders. On November-end, 2013 the revenue market share of the top three telecom service providers had climbed to over 70 per cent from less than 64 per cent a year (Trai figures).

The number of telecom players which at its peak was 277 at the end of December 2012 had shrunk to 179 and the process is on.

TIMELINE:

* Feb 2, 2012: Supreme Court cancels 122

licenses of 22 operators

* Mar 5, 2012: Centre files review petition in SC to review spectrum allocation policy

* Apr, 2012: Trai orders on new spectrum reserve price is criticised by telcos

* Aug, 2012: Supreme Court extends deadline for auction to Jan, 2013

* Nov, 2012: No bidders for CDMA

* Dec, 2012: Sistema Shyam Teleservices asks DoT to

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