The Telegraph
Saturday , November 17 , 2012
Since 1st March, 1999
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Leftover spectrum auction by March

New Delhi, Nov. 16: The government today said it would conduct another round of auction before March 2013 for unsold 2G spectrum even as it subtly attacked the Supreme Court for interfering in policy matters and the Comptroller & Auditor General for creating sensationalism by giving out presumptive loss figures for allocation in the past.

In the recently concluded 2G auction, which saw lukewarm response from bidders because of a high reserve price, only 55 per cent of the total spectrum put up for sale received bids.

“There will be an auction before March. There is no doubt about that. What procedure we follow for that auction is something we will decide in another few weeks,” telecom minister Kapil Sibal told reporters.

“At the initial stage I can tell you Rs 17,343 crore is what we have got as a result of this auction. This includes Rs 9,407 crore from the sale of spectrum in 18 circles plus the one-time fee in those 18 circles of Rs 7,936 crore. So there is a net gain, there is no doubt about it,” Sibal said.

However, he did not elaborate on the method used to calculate the one-time fee .

The sale of CDMA spectrum in the 800MHz band and the refarming of spectrum in the 900MHz band are also revenue-generating avenues that the finance ministry will be evaluating.

“The price discovery has been realised through the auction process which is still not complete. We cannot state that market discovered price is not a success or a failure,” said P. Chidambaram, finance minister.

The CDMA auction in the 800 megahertz band was cancelled after both the bidders, Tata Teleservices and Videocon, withdrew their applications citing high prices.

The telecom department plans to auction radiowaves in the 900 MHz band, which will be returned by operators in the first quarter of 2013. The 900 MHz band is considered to be 30-40 per cent more efficient than 1,800 MHz and most operators are understood to be waiting to buy back some of this spectrum.

Sources said the department of telecom (DoT) will refer the matter of spectrum pricing back to Trai. The regulator may look at a downward revision of reserve prices, while auctioning the leftover spectrum.

According to an executive from a top telecom firm, “If spectrum prices in key circles such as Delhi and Mumbai were reduced significantly, it would make sense to bid for these circles in a fresh auction.”

The auction, which lasted only two days, got total bids worth Rs 9,407.64 crore, just one-third of the Rs 28,000 crore the government was expecting.

Reaction time

Sibal today read out at a press meet a portion of the Supreme Court judgment which asked the government to auction the spectrum within a timeframe and said, “We didn’t have the elasticity that is required for policy-making.”

Sibal said, “Dynamics of the market cannot be judged by anyone. The companies were in huge debt, there was not enough liquidity, market forces have their own perspectives and assessments, the environment of sensationalism had its own impactů there are issues which cannot be decided by courts. And if you bind down the government to a particular policy prescription, results can be very dangerous.”

Responding to the BJP’s charge that the government was celebrating a flop auction to justify its stance against the CAG, Sibal said, “I am grieved by the situation. We want this sector to grow. I am sad we had to work within constraints. We always said revenue generation cannot be the sole criteria. We want to empower people but the consumer hasn't benefited from the entire exercise.”