The government’s plan to auction spectrum in the 900 and 1,800 MHz bands on March 11 to raise around R43,000 crore crashed on Monday with not a single GSM operator applying to participate in the bids. Sistema Shyam, which is a CDMA operator and whose 21 licences were cancelled by the Supreme Court last year, was the lone applicant for spectrum in the 800 MHz band, which is reserved for CDMA operators.
Monday was the last day for the companies to submit applications if they wished to participate in the auctions.
With the Union Budget slated to be presented in Parliament on Thursday, it remains to be seen what steps the government takes to salvage the situation as it needs the proceeds to reduce the fiscal deficit. One option is to reduce the reserve price as the industry has clearly indicated that the current reserve price is unviable.
Telecom secretary R Chandrasekhar told FE that the government would explore all options to see how spectrum can be auctioned in the 1,800 and 900 MHz bands.
The decisions on reserve price are taken by an empowered group of ministers headed by finance minister P Chidambaram before approval by the Cabinet.
Even if the government were to reduce the reserve price, it may not be able to auction spectrum in the 900 MHz band because the two operators — Bharti Airtel and Vodafone — from whom it has to refarm the spectrum got a sort of relief from the Delhi High Court last week. The two had challenged the government’s decision to auction the 900 MHz band spectrum by taking it away from them even when the two companies had submitted their application to the DoT for renewal of licence as per the contract. The court has given the DoT two weeks’ time to decide on their application for renewal and the companies the liberty to challenge the decision before it if they are not satisfied with it.
Meanwhile, the Supreme Court has ordered the government to put up for auction all the spectrum which got vacated due to the cancellation of 122 licences last year in February. The government had not put all spectrum for auction in November, stating that it needed to reserve some for refarming purposes. After the SC order, it had said that it would conduct another round of auctions after the March one. Thus, a scenario has emerged where the supply