like the first round of spectrum auction, the second round of auction also proved a dud as it added only Rs3,639 crore to the Government's coffers. The lone bidder Sistema Shyam Teleservices (SSTl) bid only for 8 circles instead of 11.
The Government would have collected Rs5,300 crore, as reported by The Pioneer on Monday, had SSTl bid for 11 circles.
SSTl, a CDMA player, had deposited Rs613.75 crore for the auction, which made it eligible to bid for minimum quantum of 2.5 Mhz spectrum in 11 circles. However, the company bid for only eight circles, which means it will stop operations in three more circles. The Circles won by MTS India include Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal.
Based on certain variables, the company decided not to bid for Mumbai, Maharashtra and UP East circles and would be immediately initiating the process to inform its customers in 3 circles to port out to other telecom operators of their choice, an official statement by the company said.
"Given the range of variables we have considered and the spectrum cost for 800 Mhz, it was a big challenge to arrive at a core list of 8 circles and to bid accordingly. With Rajasthan circle also a part of MTS India's footprint, we would be able to service 40 per cent of country's population, address over 60 per cent of data business potential, safeguard 75 per cent of our current revenues and significantly optimize our losses. Our go forward plan includes building an even stronger MTS brand in the country by focusing on our data centric-voice enabled strategy," Vsevolod Rozanov, President & CEO, SSTl said.
The company which operates under MTS brand has already announced discontinuation of services in 10 out of 22 telecom circles - Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East, Orissa and Punjab.
The CDMA sale did not take place in November as there was no participant due to high cost. Government has since then reduced the spectrum base price by 50 per cent but still no company, except SSTl, showed any interest. The auction for 2G spectrum for GSM players held in November last year was spread across three days fetching the Government Rs9,407 crore.
The spectrum won by SSTl in eight circles is technology neutral and would be valid for 20 years. The company would be required to pay Rs 3,639 crore for the license period. The terms include payment of 25 per cent of the final bid amount within 10 days, followed by a payment moratorium until March 2016, after which the balance amount will be paid in 10 equal annual installments.
However, the Government will have to adjust Rs1,626 crore in the amount payable by the SSTl for the sale as earlier payments paid at the time of getting licenses in 2008 which were later quashed by the Supreme Court in February last year.
As on February 28, 2013, SSTl has on rolls employee count of about 2,850 out of which 15 per cent are employed in the 3 circles where the Company decided not to bid and would therefore be affected. Full efforts are being made to absorb maximum number of employees in other circles. In-addition, care is being taken to place some of the employees in other Companies. The Company will also be closely working with all its local partners to address their concerns. SSTl has a customer base of over 12.1 million, out of which 13 per cent come from the impacted circles, the company further added.
In 2008 when A Raja was the telecom minister, the Government had got Rs10,772 crore for 2G licences. So far, through the two auctions, it has collected Rs13,046 crore.