2G spectrum auction nets Rs 61,162 crore, will make Chidambaram smile: Sibal

The government's coffers got a much-needed boost after the 2G spectrum auction attracted higher-than-expected bids worth over Rs 61,000 crore after 68 rounds of bidding. Terming the auction successful, Telecom Minister Kapil Sibal said that the government will get revenues of Rs 61,162 crore and it would hopefully bring a smile to Finance Minister Chidambaram's face.

The funds from the spectrum sale are crucial for the government to bridge the fiscal deficit, which in the first three quarters inched closer to the budgeted target for the whole year.

Eight telecom firms, including Bharti Airtel, Vodafone, Idea Cellular and new entrant Reliance Jio Infocomm, were in the fray. The telecom players bid aggressively in the 900 Mhz, which was in short supply and being auctioned in just three cities, including Delhi and Mumbai, the two most important markets.

The stakes were especially high for Vodafone and Bharti after the Supreme Court refused to extend their licences in the 900 Mhz band for Delhi, Mumbai and Kolkata. To continue their operations in these three crucial markets, Vodafone, Airtel bagged 900 MHz band in Delhi;  Airtel, Vodafone in Mumbai; Airtel,  Vodafone in Kolkata. Idea was also successful in bagging the 900 MHz band in Delhi.

The government had set a target of Rs 40,874 crore for this fiscal year (FY14) from spectrum, including the auction amount, one-time spectrum charge and annual regular licence fee. The winners can pay the part of the money upfront and the remaining amount in yearly instalments. At a minimum, the government would get an estimated Rs 18,200 crore this fiscal, much higher than budget estimates of Rs 11,300 crore, according to Telecom Secretary MF Farooqui.

The telecom department had put on the block about 385 MHz of radio waves in the 1800 MHz band and 46 MHz in the 900 MHz band. In the 900 MHz band, all the spectrum on offer has been sold while in 1800 MHz nearly 80 per cent got sold, Mr Farooqui said.

Bids for the 900 Mhz band remains typically higher than other bands as it is considered to be better quality spectrum. So it requires lower investments for telecom companies to set up infrastructure in 900 Mhz band. In comparison, the 1800 Mhz requires higher capital expenditure.

This was third auction of 2G spectrum after the Supreme Court had cancelled 122 licences in February 2012.

(With Agency Inputs)