2G auction: Ministerial panel lowers base price of unbid circles by 30 per cent

2G auction: Ministerial panel lowers base price of unbid circles by 30 per cent
After poor response to last month's 2G spectrum sale, a ministerial panel on telecom today decided to lower the base price by 30 per cent for radiowaves in the 1800 MHz band in four circles, which attracted no bidders, for fresh auction this financial year.

These four circles—Delhi, Mumbai, Karnataka and Rajasthan—were some of the most expensive circles in last month's 2G spectrum auction.

No decision was taken on the auction of CDMA spectrum, which did not see any auction after the two interested parties pulled out.

"The Empowered Group of Ministers (EGoM) has decided to reduce the reserve price by 30 per cent in the four circles in 1800 MHz band, where the spectrum remained unsold," a top source told PTI.

The reserve price for last month's sale per block in Delhi was Rs 693.06 crore, while the same for Mumbai, Karnataka and Rajasthan was fixed at Rs 678.45 crore, Rs 330.12 crore and Rs 67.08 crore, respectively.

The EGoM also decided to auction spectrum in 900 MHz band in Delhi, Mumbai and Kolkata simultaneously with sale of radiowaves in 1800 Mhz.

"The EGoM met today and we have decided to auction the 1800 MHz band in four circles—Delhi, Mumbai, Karnataka and Rajasthan—and 900 MHz band in Mumbai, Kolkata and Delhi," Telecom Minister Kapil Sibal said after the meeting.

He added that a decision on the pricing has been taken and "we will now be moving the Cabinet for the approval on the pricing and we have also decided that we will complete the auction process within this financial year".

Sibal said no decision has been taken on the auction of airwaves in 800 MHz band. The much-hyped 2G mobile phone spectrum auction was virtually a flop as the government managed to garner bids worth just Rs 9,407 crore as against a minimum target of Rs 30,000 crore.

Compared to the 3G auction, which lasted 35 days and got Rs 67,719 crore, the latest round of 2G spectrum auction held in November lasted just two days.

Nearly half of the GSM airwaves that the government sought to auction across India’s 22 telecom circles remained unsold. Telecom Minister Kapil Sibal has said then that the government’s “intent is to have another auction before March 31”.

Of the five telcos that bid for GSM airwaves, Videocon won four blocks each in six circles and Idea won four blocks each in seven circles. Telenor got spectrum in six circles. Vodafone secured spectrum in as many as 14 circles, which included Uttar Pradesh (East) and Uttar Pradesh (West). Bharti Airtel won spectrum in only one circle, Assam. None of the telcos participating in the 2G auction applied for a pan-India licence, saying that the reserve price was too high.

The government’s reserve price in fact drew criticism even before the auction took off. Telcos and analysts had warned that the process would get a weak response. Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, too said that the Rs 14,000 crore reserve price was too high.

The auction was ordered by the Supreme Court, which, in February this year, had cancelled 122 licenses sold in 2008 by Mr Raja, through a process allegedly bent by corruption. Last year, in a politically incendiary report, the government's auditor CAG said that the country had lost up to Rs 1.76 lakh crore because telecom licenses and spectrum were not auctioned in 2008.

When the auction flopped, the gist of the government's response was, "I told you so."

Telecommunications Minister Kapil Sibal emphasised that policy must remain the prerogative of the government and that an "environment of sensationalism" is to blame for the poor response by telecoms to the auction. 

“The telecom story is no longer a story we can share with the world. Sensationalism took over,” Mr Sibal said a day after the auction.  “You cannot extrapolate figures and sensationalize them and destroy the hen that laid the golden egg,” he added.

With inputs from PTI


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