The auction of 2G spectrum held on Monday turned out to be a damp squib with the government mopping up only Rs 9,224.75 crore after seven rounds of bidding. At the end of the day, bidding was under way in the two circles of Uttar Pradesh (east) and (west), the only two circles where the demand for spectrum has overshot what was on offer. Of the total 22 circles, for which spectrum was auctioned, bids were received in only 18 circles with four circles — Karnataka, Delhi, Mumbai and Rajasthan — not finding any taker. The government has targeted revenues of R40,000 crore but it’s unlikely, it will get anything close to that even after auctions resume on Wednesday.
“The total quantum bid for is a little over Rs 9,200 crore at the end of the fifth round,” telecom secretary R Chandrashekhar said, adding that of the 176 blocks of spectrum that were put on auction, bids were received only for 98.
This is the second time that the government is conducting auctions for the sale of spectrum, the first being in 2010 for 3G and BWA spectrum, a huge success that fetched it R1.05 lakh crore against the budgeted R35,000 crore. Analysts believe that had the auctions been held in January 2008, they may have earned the government far more given that the macro-economic environment then was better and the balance sheets of telcos less leveraged.
They also believe that with the government having drawn a blank in four circles, it may now need to come up with ways of making up for the shortfall.
Problems had cropped up for the government even before the start of auctions when the only two bidders – Videocon and Tata Teleservices – pulled out of the CDMA auctions citing high reserve price. This has left the government to think how to charge the one-time levy for spectrum held beyond 2.5 Mhz by CDMA operators like Reliance Communications and Tata Tele. Some problem has already cropped up for the government with the Supreme Court asking it why all the 430 Mhz vacated spectrum due to cancellation of licences were not put up for auction. The court has observed that the government was playing with its order.
The auctions, which began at 9.00 in the morning saw lukewarm response right from the beginning as the industry refrained from intensive bidding citing the base price of Rs 14,000 crore for