As the deadline for submitting application forms for a second round of auction of spectrum slated to begin on March 11 ended, the government seemed to be up against the wall on revenues. It could manage only about Rs. 9,400 crore in the first round of spectrum auctions in November.
Industry officials said the reserve price set by the government for the auction was too high. The government now has the option of dropping the prices again to see if there are takers but has to contend with what courts say in a case linked to the 2G spectrum scandal that shook the nation last year.
Sistema Shyam Teleservices Ltd (SSTL) was the sole applicant for the 800 MHz band that is used for providing CDMA-based services. It filed applications for only 11 circles. It did not apply for another 10 circles for which it held licences. It had recently announced that it would stop providing services in these circles.
"SSTL may not even bid for all the 11 circles for which it submitted applications," said a source familiar with the developments. If this happens, the government's potential revenue will decline even further.
The mobile phone service industry said that there were no takers for 900 Mhz band as there are legal issues associated with it. Bharti Airtel and Vodafone have approached the Delhi High court pleading that they should get 900 Mhz band spectrum without auctions as it was part of their licence conditions.
"There is a problem of legality with the whole issue of refarming of 900 Mhz band. That is why the operators decided not to go ahead with it," said Rajan Mathews, director-general of the Cellular Operators Association of India.