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1,800-MHz Spectrum Auction Gets Muted Response

The 1,800-MHz spectrum auction by the Indian government for the Delhi, Mumbai, Karnataka and Rajasthan telecom circles failed to attract bidders, in spite of cut of 30 percent in base price. However, for the 800-MHz band, it attracted only one bidder, reports said.

Monday was the last date to submit applications for the auction, which was to begin on March 11.

The response was the same as that in the previous auction in November last year, when these circles had not been able to secure even one bidder because of the high reserve price.

The government had put on offer 50 MHz of airwaves in the 1,800-MHz band for four circles, besides 76.25 MHz in the 800-MHz band across the country.

For the 800-MHz (CDMA) spectrum, Sistema Shyam Teleservices was the lone bidder applying for 3.75 MHz of spectrum in 11 telecom circles (Delhi, Gujarat, Karnataka, Kerala, Kolkata, Maharashtra, Mumbai, Tamil Nadu, Uttar Pradesh (East), UP (West) and West Bengal circles), after the base price for the band was reduced 50 percent.

Sistema, which had lost its licence in 21 circles following a Supreme Court order, had not bid in the November auction.

Since it is the only bidder, it is clear that Sistema would have to pay Rs.5,623.50 crore for 3.75 MHz of spectrum in 11 circles. Considering it has to pay only 33 percent in the first year, its outgo for now would be Rs.1,855.75 crore if it goes for the deferred payment route. Also, there will be Rs.1,658 crore adjustment for its cancelled licence. That would bring down its net outgo to less than Rs.200 crore.

Had the government been able to attract bidders for the entire spectrum offered, it would have been able to earn revenues of Rs.20,209.17 crore. And, even if all the players winning spectrum went for deferred payment, the realization this year would have been around Rs.6,669 crore.

The muted response to its auction plan is set to upset the government's collection target of Rs.40,000 crore from sale of spectrum and one-time charges this financial year.

In the previous auction, the government had been able to garner only Rs.9,407 crore. However, under the auction terms, a company has to pay only a third of the amount in the first year and the rest in eight instalments. So, the government's actual earnings, after adjustments made for operators' cancelled licences, had got shrunken to a mere Rs.1,706 crore.

by RTT Staff Writer

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