Friday, April 30, 2010

3G revenue at Rs 38453 crore

NEW DELHI: The price bid for a single pan-India block of 3G spectrum hit a whopping Rs 9,521 crore on Friday. This surpasses the total revenue of Rs 9,000 crore earned from the allocation of 120 licences for 2G spectrum by telecom minister A Raja on a first-come-first-served (FCFS) basis in January 2008.



The total revenue accruing to the government from the sale of four pan-India 3G slots and five extra slots in Punjab, WB, HP, Bihar and J&K is Rs 38,453 crore. Bidding activity was raised from a level of 80% to 90% for the first time on Friday and the real price will emerge when this is raised further to 100%.



This huge price differential between the FCFS process for 2G versus the transparent auction process for 3G exposes the real motivation for alleged lobbying activities for 2G licences. Each of the 120 2G licences given in January 2008 came along with 4.4 MHz of start-up spectrum, with a cumulative average yield of Rs 17 per MHz of spectrum.



This places the loss to the exchequer from 2G closer to Rs 40,000 crore and climbing. This is double Rs 22,000 crore estimated by the CBI in its FIR in the alleged 2G scam.



At Friday's closing 3G price, the price per MHz has already touched Rs 86, already five times the Rs 17 per MHz price received for 2G spectrum.



A comparison across telecom circles that received the highest, medium and lowest bids in A, B, and C circles, shows the 3G auction earnings are 5 to 30 times higher than the 2001 price set by Raja for the same circles for 2G spectrum (see chart).



In his defence, Raja compared 3G spectrum to Basmati rice and 2G spectrum with PDS rice in Parliament recently, in a desperate attempt to exhibit a difference between the two types of spectrum.



Experts rubbish this claim. "This is a shocking statement and betrays the most basic understanding of telephony, public policy and economics. Given that even today, 3G is used worldwide primarily for voice, there is no case for a massive premium. India, more than anywhere else, will use 3G for voice telephony exactly similar to 2G spectrum as 92% of the market is and will be voice for a long time. If auctioned, 2G would have yielded the same, if not higher revenue, for the government," says a telecom analyst.



Raja had vehemently opposed the cause of auctions for 2G spectrum, describing them as anti-consumer.


News From: http://www.7StarNews.com

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