Sunil Mittal won 3G spectrum to launch high-speed data services across 13 circles in the country, but the master of airwaves is not exactly happy with the way the battle was won, nor his company?s inability to bag the rest of the circles. Breaking his silence on the astronomic sums bid by telecom companies in an interview with FE, the chairman of Bharti Airtel termed the bidding ?completely unrealistic.?
Mittal?s comments, which reflect overall downcast sentiments in the telecom industry, contrast with the excitement in government at mopping up over Rs 1 lakh crore in the wireless spectrum auctions.
?The bidding which is happening for broadband wireless access is wrong and the same was the case with regard to the 3G auctions which preceded it. The government may be in a celebratory mood with high revenues, but having bid so high, one thing is ensured: Tariffs for 3G services will remain high and unaffordable for large sections of people.? Mittal added that one year down the line, everyone would come to know who all are able to consolidate 3G services, having bid so high for just 5 MHz spectrum.
He said that the high bids happened due to the faulty design of the auction process, which enabled certain players to keep coming in and going out, thus raising the bid amounts and creating an artificial rise in prices.
Serious players had no option but to participate in the bids till the end. ?It (the auction design) could have been much simpler and straightforward,? Mittal said.
Bharti, as well as other big operators like Vodafone-Essar, Reliance Communications, Tata Teleservices and Idea Cellular, have been victims of irrational bidding, as none of them could get 3G spectrum across all 22 circles. Bharti had to pay Rs 12,295 crore for the 13 circles it won.
The clock auction bidding process used in 3G and BW auctions controlled by the government, which raises the bid till the time there is equilibrium (supply and demand being equal) in all the 22 telecom circles of the country. This enables an operator to get out from bidding from a circle and re-enter later while till the bids are on. Several operators resorted to bid up the price for rivals, even when they were not interested in spectrum in certain circles.
The bid for a pan-India 3G spectrum ended at Rs 16,750.58 crore, helping the government realise Rs 67,718.95 crore. A pan-India slot at the ongoing BWA auctions is now Rs 12,257 crore, which adds up to Rs 36,772 crore for the government. With this, total revenues from 3G and BWA stands at Rs 104,491 crore, sharply higher than the government?s target of Rs 35,000 crore.