In what appears to be a d?j? vu of under selling of spectrum once again, the finance ministry has impressed upon the department of telecommunications (DoT) not only to go ahead with 3G spectrum auction on time, despite the global financial crunch but also to auction it in the nine circles where the ministry of defence is yet to release spectrum.
The finance ministry’s solution to this is: After the auction accept 25% of the successful bid amount by the bidders and put them on a wait list till the time spectrum is made available to them.
Not only this, the finance ministry wants the DoT to complete the auction process by the end-December or at the most early January and is not even willing to wait till mid-January, which has been fixed as a tentative date by the DoT to complete the process.?The recent amendments in the ECB guidelines, specifically providing for raising of external funds by companies for payment of 3G auction amount(s) to government should provide enough relief to the potential bidders to make credible and competitive bids,? Ashok Chawla, secretary, economic affairs in the finance ministry has written to DoT secretary, Siddhartha Behura.
This clearly brings out that while DoT is willing to wait for the clouds of crisis to pass away before the auctions are conducted, the finance ministry wants them to be held as early as possible. The reason being that the estimated Rs 40,000 crore can be budgeted in the current fiscal’s books to bridge the fiscal deficit.
Castigating DoT for pointing out lack of spectrum in nine circles quite late, Chawla has written,?The inadequacy of spectrum in nine circles and the need to re-farm the broadband wireless (BWA) spectrum has been raised rather late in the day. Ideally this may be resolved in the next meeting of the group of ministers (GoM) on vacation of spectrum and raising resources?. Where it is not possible to allot the entire amount of 30 Mhz of 3G spectrum immediately, with 25% of the successful bid amount be deposited by bidders who wish to remain in the waiting list?.
On the time line, Chawla has written,?As per the tentative auction schedule indicated by you, the auction is likely to get completed by January 15, 2009. This may be compressed by a couple of weeks so as to complete the process by end December, 2008 or early January, 2009?.
As reported by FE on October 27, given the liquidity crunch in the global markets the DoT is believed to have calculated that the auction proceeds at such a time would go well below the Rs 40,000 crore estimate, despite the opening up of the ECB window. According to DoT sources, if the 3G auction does not bring the global telecom players and if bids are not robust then there’s likelihood that the department may once again face allegations of underselling as it has faced recently in allocating bundled spectrum to new 2G licensees. In fact, communications and IT minister, A Raja met the Prime Minister Manmohan Singh and finance minister P Chidambaram on Tuesday where it was expressed that all the stake sales in the telecom companies was happening well within the ‘corporate laws’. The government charges a maximum of Rs 1,652 crore for a Unified Access Service Licence (UASL) and bundled start-up spectrum of 4.4 Mhz. However recently two telecom players, Unitech and Swan Telecom sold chunks of their stakes receiving exponential valuations of around $2 billion.