The spectrum auction, which kicks off on October 1, is being studied with keen interest by telecom experts, Government, corporates and consumers. There is general consensus that it will turn out to be a major success
The much-awaited spectrum auction starts tomorrow (October 1) with a huge expectation of revenue to the Government. The history of spectrum auction is related to the political developments that changed the country from 2010. The first auction happened in April 2010, when the 2G Spectrum scam broke out. Finance Minister Pranab Mukherjee was given charge to conduct the 3G and BWA (Broadband Wireless Access) Spectrum auction, sidelining the scam-hit Telecom Minister A Raja — who was forced to resign in November 2010.
The first auction started in April and ended in June, with daily surging prices which rocked the country. By auctioning 3G and BWA (the so called 4G), the country mopped up Rs 1.06 lakh crore. Those days, the Government expected only Rs 30,000 crore (as per Mukherjee’s Budget speech). Earlier Raja, with the consent of former Finance Minister P Chidambaram, allotted spectrum on whim to 122 licencees (highest ever) for just around Rs 9,200 crore. The3G/BWA auction, by gathering Rs 1.06 lakh crore, exposed the UPA Government, leading to anti-corruption movements in the country exposing the 2G scam in the public domain. The Comptroller and Auditor-General’s (CAG) Rs 1.76 lakh crore loss figure on Raja’s allotments were based on the 3G prices.
It’s interesting that several corporates and pink papers are now cheering the forthcoming auction. Those days, when The Pioneer was arguing for an auction from 2008, sidelining Raja and the formation of an Empowered Group of Ministers, many pink papers even wrote editorials against high prices to be shelled by telecom companies in the spectrum auction. From 2008 to 2010, The Pioneer had more than 200 front-page reports on the 2G scam, exposing corruption. Business papers argued that high prices of spectrum would lead to increased charges for customer. What do they have to say now, with Mukesh Ambani’s Jio offering cheap prices and shaking up the existing operatorsIJ
The anti-corruption movements led to a surge in popularity of the BJP, which was sleepy till mid-2010. The Aam Aadmi Party (AAP) was born and it tasted power with lightning speed. The ruling Congress was washed out in most elections since 2011. There was a whistle-blower, Aseervatham Achary, who was hounded and who later quit service and joined politics. Public interest litigations filed by Subramanian Swamy and Prashant Bhushan led to the cancellation of licences allotted through the 2G scam and. The Congress went against the apex court order and lost in the Presidential Reference to the Supreme Court.
But the second auction directed by the Supreme Court in November 2012, was sabotaged by the Congress and certain corporates. In a single day, the auction ended with just the issue of 19 licences. All Cabinet Ministers landed at a Press conference to blame the CAG and the courts. It was strange to see Ministers feeling happy about loss of revenue. But all hushed up the fact that, even in sabotaged auction, the country received Rs 9,400 crore from just 19 licences, that too in small circles, while Raja had given away 122 licences for Rs 9,200 crore.
The ruling Congress did not want surging prices as the 2010 surge in auctions exposed the 2G scam in public mind. It perhaps also wanted to ‘teach a lesson’ to the judiciary for dictating terms in the auction. Corporates played along with the Government as they also didn’t want high rates and wished to control the spectrum price. In 2014, all operators’ licence period was nearing an end, and the operators didn’t want a higher rate to be arrived in the 2012 auction. If high rates were achieved in 2012, it would affect the mandatory auction in 2014.
Then came the March 2014 mandated auction. More than Rs 68,000 crore came to the public exchequer. The 2G auction rates crossed the 3G figures. Even then Telecom Minister Kapil Sibal, who had floated infamous ‘Zero loss’ theory in the 2G scam, expressed joy at the bonanza. In the March 2015 auction, the NDA Government gathered Rs 1.09 lakh crore. In total, by auctioning spectrum, the exchequer got more than Rs 2.95 lakh crore from 2010-2015. Technically, there was an auction in 2001. An attempt to conduct an auction did not succeed in 2003, as there were no takers. Those days, we had roughly three milllion mobile users. We continued to allot spectrum at the 2001 rate, without auction, even though the number of mobile subscribers had jumped to more than 300 million.
The October 1 auction is expected to fetch at least one lakh crore rupees, experts say.
Seven companies including, Mukesh Ambani’s Reliance Jio, are in the fray. More than Rs 14,600 crore has been submitted as bank deposit for this auction, where Reliance Jio is expected to put up a fight with major players such as Airtel, Vodafone and Idea. As per rules of the auction, the maximum amount of auction rate would be 10 times the deposit value. Reliance Jio, which is going to flooded with customers due to its freebies, is in need of spectrum, and its hunger can lead to a fierce price war.
This will benefit the public treasury. Anil Ambani’s Reliance Communication and his elder brother’s telecom venture already have a strategic alliance, and the spectrum auction’s daily surging rates would be music to the ears of finance managers in the country. Small telecom companies like Aircel and Sistema Shyam have also entered into acquisition arrangements with Reliance Communications; ultimately all synergise with Reliance Jio.
Who says it’s the end of good timesIJ It’s just the beginning.
(The writer is special correspondent, The Pioneer)
