iconimg Tuesday, June 02, 2015

HT Correspondent, Hindustan Times
New Delhi, February 13, 2014
The long-jinxed spectrum auction for 2G mobile services has concluded with indications of a thumping success: the government will get an estimated Rs. 61,000 crore from the sale – helping narrow the fiscal deficit for a resource-scarce finance minister.

However, politically, the success might be embarrassing for the UPA government, which had said it had incurred “zero loss” in the 2008 round of spectrum sale that ran into a corruption scandal that led to the Supreme Court cancelling licences and ordering a fresh auction round.

The numbers in a way confirm the logic of the Comptroller and Auditor General of India who suggested that the government had undergone a huge revenue loss (Rs 176,000 crore) by under-pricing the radio frequency.

The government will immediately secure about Rs. 15,296 crore which is 25% of the estimated Rs. 61,000 crore.

The 10 days of spectrum auction, in the 900 MHz and 1,800 MHz bands (radio frequencies) ended on Thursday, after 68 rounds of bidding and counterbidding.

The current round of spectrum auctions was held for two reasons: to allow telecom companies to pick up spectrum to go with renewal of licences that expire this year and to auction the spectrum available with government following cancellation of 122 telecom licences in 2012 by the Supreme Court.

Industry officials fear tariff hikes for consumers.

“It remains to be seen if opera­tors will have the resources to invest in networks and marketing after bearing the high spectrum costs,” said Rajan Mathews, director-general of the Cellular Operators’ Association of India.

But Hemant Joshi, partner, Deloitte Haskins & Sells, describing the auction closure as a “relief for the industry” said “all the increase in cost is unlikely to get passed on to the consumer.” Telecom companies will also run up a huge debt pile to fund the spectrum purchases.