Tuesday, November 13, 2012

Lukewarm response to 2G auction on Day 1

NEW DELHI, November 13, 2012

India's attempt to reboot the telecom sector and address its fiscal deficit woes by holding a Supreme Court-ordered 2G spectrum auction on the eve of Diwali appears to have failed.

Far from the expectation of Rs. 40,000 crore, on Monday, first day of the auction, the government received bids for just Rs. 9,224 crore, displaying weak interest from major players. There was no bidder for a pan-India licence for which the base price fixed by the government is Rs. 14,000 crore. This was Rs. 4,000 crore less than the price originally recommended by telecom regulator TRAI.

The turnout was so weak that only 18 of the 22 telecom circles received a bid. There were no bidders in the Delhi, Mumbai, Rajasthan and Karnataka circles.

The spectrum reserve price was exceeded only in Uttar Pradesh (West) and U.P. (East). Gujarat and Bihar received bids for all eight blocks — each worth 1.2 MHz that were put on the block. Bids were received for seven blocks in Assam, and six in Haryana, Madhya Pradesh, Jammu and Kashmir, the north-east, Odisha and West Bengal. Maharashtra, excluding Mumbai, received bids for five blocks. Tamil Nadu, Kolkata and Himachal Pradesh fetched bids in four slots.

Telecom Secretary R. Chandrashekhar told The Hindu. "Unlike for the Finance Ministry, it is not for us to worry about revenue maximisation. Our role is restricted to fulfilling the mandate given to us by the Supreme Court."

Spectrum auctions have come on the back of the 2G scam expose, which culminated in the cancellation of 122 licences granted illegally by the then Telecom Minister A. Raja after a year-and-a-half of litigation in the court.

Five companies — Bharti, Vodafone, Idea, Telenor and Videocon — are bidding for the 2G GSM spectrum. There are no bidders for CDMA spectrum.

After seven rounds on Monday, the auction will now continue on Wednesday.

Most of the bidders are members of the Cellular Operators Association of India (COAI), whose secretary general Rajan Mathews said, "We had warned that the high reserve price will result in extremely muted bidding and that is exactly what has happened."

Sunil Bharti Mittal, who runs Bharti Airtel, India's largest mobile company, had originally opposed the exceptionally high reserve price and stated last week that the auction would be over on the first day itself because of the high price.

Commenting on the complete washout of the spectrum auctions, the former CEO of Idea Cellular, Sanjiv Aga, said: "The court had said to take spectrum from one pocket and reissue the entire quantum. Now if you have a system by which three quarters [of spectrum] are taken away from auctions, what has been the end of all this? This is not a very desirable outcome."

Based on the participation on Monday, it is highly unlikely that much will change on Wednesday since 98 of the 170 slots have received bids.

Leading jurist Harish Salve, who represented several companies in the High Court in the 2G case, stated, "There is a prevailing sense of gloom — that everybody who invests in India is open to attack. No one wants to invest in India. There is uncertainty."
News From: http://www.7StarNews.com

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