New Delhi, Oct. 25: The government is confident of raising the targeted Rs 40,000 crore from the sale of spectrum, though only a few players have confirmed their participation in the November sale.
One reason for the government’s optimism is the estimated Rs 20,000 crore — which is half the target — expected to be raised from a one-time levy on operators for holding excess spectrum.
According to analysts, with only half-a-dozen players filing for participation and no new foreign firm entering the ring, these auctions are unlikely to witness the aggressive bidding seen in 2010 for 3G spectrum.
The government earned over Rs 1 lakh crore from the sale of 3G and broadband wireless spectrum in 2010.
“The levels of bidding may not go very high. However, there is a potential for prices to move above base rates because of aggressive competition among incumbents and new entrants in a few circles with high revenue generation capability,” said officials of the department of telecom.
Vodafone India is bidding in 17 circles, while newbie Telenor of Norway has applied for 13 of the 22 circles. Videocon will be bidding for 17 circles in the 1,800 MHz band.
“Some of these circles overlap and operators are also looking at using this liberalised spectrum to offer new generation services such as video calling. So, some circles can see competitive bidding,” said industry players.
Analysts said those who stayed out of the November auction could be more interested in spectrum in the more efficient 900 MHz band. This sale is expected by June next year and the base price will be linked to the prices of the November sale.
There are only two contestants — Tata Teleservices and Videocon — in the 800 MHz CDMA band, while the 1,800 MHz GSM band has seen interests from Bharti Airtel, Vodafone, Videocon and Telenor.
“The CDMA business in India has not taken off the way it has done in some Western markets. Most of the CDMA players got dual technology licences to move to GSM operations because of customer preference. When for Rs 1,600 crore paid as licence fee by operators in 2008, there was no business for CDMA, it was unlikely that operators would consider a business case with the payment of Rs 18,000 crore,” said Hemant Joshi, telecom expert at consultancy firm Deloitte Haskins & Sells.
Officials calculated that if operators opted for staggered payment and bids did not move higher than the base rates, the exchequer could earn Rs 15,000 crore. The one-time levy on private operators will add another Rs 20,000 crore to the government kitty.
Officials, however, say the figure is likely to be Rs 40,000 crore or more as bids for some circles, such as the metros and Andhra Pradesh or Maharashtra zones, will be higher than the base rates. They also pointed out that many might pay their fees upfront.
“Staggered payment will mean an additional interest payout at 9.5-10 per cent. A prudent business case will be to raise the money through external commercial borrowing (where the rate is lower) and pay the entire money upfront,” said the officials.