Spectrum auctions today: Govt unlikely to meet earning target

The telecom spectrum auctions that begin on Monday for the 2G airwaves will be the first in a series of auctions the government plans to hold to allocate natural resources from now.

The auctions will accordingly be closely tracked for the bidding process, the method of price discovery and the ability to generate more revenue for the government. The coal and the mines ministries, for instance, plan to use some of these methods to apportion blocks soon.

But unlike the auctions for the 3G spectrum held two years back the financial shape of the telecom companies and their lenders, the banking sector, has worsened so sharply meanwhile that it is unlikely that bidding will be aggressive.

Consequently, though the government has pencilled in a target of raising Rs 40,000 crore through the 2G auctions, it could fall short by a huge margin. Estimates show that the accruals from the auctions for 1800 Mhz — the spectrum for the GSM services — may not be more than Rs 12,000 crore. For the 800 Mhz — the CDMA spectrum — the two bidders have already dropped out.

In 2010, the government had earned Rs 1.06 lakh crore after several rounds of highly competitive bidding for the 3G and BWA (also known as 4G) spectrum that lasted for 50 days. The auctions for the GSM airwaves, which will start at 9 AM on Monday, became necessary after the Supreme Court in February this year cancelled 122 telecom licences awarded in 2008 by the then telecom minister A Raja.

The telecom companies have shown they are lukewarm to buy fresh spectrum going by the number of pre-bids they have submitted. Bharti has offered to bid in only five and Telewings, the new joint venture of Telenor, is bidding for only nine of the 22 circles on offer after losing entire licence in the Supreme Court order.

... contd.

ALSO READ

After lull, highway projects see aggressive bid offers

PM: Govt initiating more measures to attract investments

Cautious RBI cuts repo by 25 bps, says little space for more easing

‘Govt mulling stronger laws to block Ponzi schemes’