2G auction flops; govt collects Rs 9,407 cr only
Low mop up spoils plan to check deficit
The auction, termed a big flop, is contrary to the high valuation estimated by the Comptroller and Auditor General (CAG) in its report two years ago. Announcing the results, Telecom Minister Kapil Sibal said in the auction that lasted just two days, the amount raised was Rs 9,407.64 crore. This amount is much lower than the 3G spectrum bidding that took place in 2010 in which the government received Rs 67,719 crore.
Industry termed that high reserve price was the reason behind the poor response from telecom companies. However, Sibal dismissed the allegations that a cartel by the telecom companies ensured that the auction flopped.
Lukewarm response from the telecom companies also upset the government plan to earn Rs 40,000 crore from this fiscal from sale of radio waves to meet the revised fiscal deficit target of 5.3 per cent of GDP. The government expected that out of the Rs 40,000 crore, it could earn Rs 28,000 crore from GSM spectrum and the rest from the CDMA. However, this time there was no bidding for CDMA as both Videocon and Tata Teleservices backed off. The minister said only 101 out of 144 blocks of spectrum on offer received bids.
Metros Delhi and Mumbai, which accounted for 40 per cent of the base price of Rs 14,000 crore for 5 MHz of 2G spectrum, attracted no bids. Similarly, Karnataka, Mumbai and Rajasthan also did not receive any bids.
Interestingly, none of the five companies bidding for the spectrum made any offer for pan-India airwaves for which the reserve price was set at Rs 14,000 crore, a rate considered high by the industry.
According to the provisional result, Vodafone emerged the biggest winner, getting additional spectrum in 14 circles of Jammu and Kashmir, Assam, Himachal Pradesh, Uttar Pradesh (East), Uttar Pradesh (West), Madhya Pradesh, Gujarat, Haryana, Bihar, Kerala, Odisha, North East and Punjab. Its market competitor Bharti Airtel managed only in Assam circles.
Dismissing allegations that companies colluded with the government, Sibal said: “We have followed the court direction. Though the court asked us to sell (spectrum at a minimum price of) Rs 18,000 crore, we brought the price down because we wanted to sell, we wanted companies to buy.
“If we had fixed it at Rs 18,000 crore in terms of what the Trai had recommended, this (even Rs 9,407 crore) would not have been fetched,” he added. The government had put on auction around 60 per cent of the spectrum that was freed by the Supreme Court in February this year .