Even as a section in Government feels that high reserve price is the reason for the recently held unsuccessful auctions and the matter should be referred back to Telecom Regulatory Authority of India (Trai), the body seems not to be in agreement.
A senior official of the body said that a number of factors could be the reason for poor response to the last two auctions. “The business cycle, for example, has changed in the last four years. Companies have heavy debt on their balance sheet, which leaves no capital with them for participating in auctions. A number of the major players in the market had put in great amount of money in 3G auctions and 3G has not paid them back yet. In addition, some companies also diversified into other international markets. Over that the liquidity problem in the banking sector. Where is the moneyIJ,” he explained.
He further said that, the body, however, will give its view on the matter if the matter is referred back to them, but it doesn’t share the view that the base price was high and responsible for the failure of the recent auctions.
A week ago, Planning Commission Deputy Chairman Montek Singh Ahluwalia had suggested that the Government refer the matter back to telecom regulator Tra for recommendations. “My personal view is that it’s better to get a recommendation from Trai...(because) benchmark is some unrealistic price and it won’t lead to a solution,” Ahluwalia had said. The Government had fixed reserve price of Rs14,000 crore for 5 MHz GSM band and Rs18,000 for 5 MHz CDMA band.
The Government has had two unsuccessful attempts to auction spectrum in the last six months and could collect only around Rs13,000 crore, way below its target of garnering about Rs40,000 crore in the fiscal year 2013.
The Government could earn only Rs9,407 crore in the first round of auction in November against target of Rs28,000 crore from the sale of 2G spectrum in the GSM band. The February auction even beated the first auction and fetched only Rs3,639 crore.
Revealing the 2G scam, the Comptroller and Auditor General of India had said that the telecom minister A Raja caused a loss Rs1.76 lakh crore to the exchequer in giving away spectrum on first-come-first-serve basis in 2008.
The Government has plans for the third round of spectrum auction and may put on block 2G GSM airwaves in Delhi and Mumbai circles, and CDMA spectrum in 13 circles that remained unsold in the previous sale held in March.