Spectrum auction set to yield Rs 1.1 lakh crore, but tariffs may rise
India's biggest telecom spectrum auction ended on Wednesday after 19 days of fierce bidding that fetched about Rs 1.10 lakh crore to the government.business Updated: Mar 26, 2015 02:47 IST
The government is set to earn Rs 1.1 lakh crore from the spectrum auction that concluded on Wednesday, with eight operators jostling to buy precious radiowaves after 19 days and 115 rounds of fierce bidding.
However, mobile tariffs are likely to go up to meet the high cost of spectrum following the aggressive bidding, experts said.
“While economics demand immediate tariff increase, market forces will determine the quantum and timing of the increase.” said Hemant Joshi, partner, Deloitte Haskins & Sells.
Spectrum — radiowaves that carry telecom content including voice and data — have been mired in political controversy. Having attracted a substantial amount for spectrum sale, finance minister Arun Jaitley said: “I am glad that the presumptions that some people had, that spectrum is worth zero, have been belied.
The Comptroller and Auditor General had estimated a loss of Rs 1.76 lakh crore to the exchequer from not auctioning spectrum.
Intense competition may, however, keep tariff hikes away fro sometime. “In this competitive environment, operators will find it difficult to raise data or voice tariffs in immediate term,” said Arpita P Agarwal, leader, telecom, PwC India.
Before disclosing details of the result and names of successful bidders, the government will have to wait for direction from the Supreme Court, which is hearing the plea of operators against the bid guidelines and process. The case will come up for hearing on Thursday.
Winning bidders will have to pay a quarter to a third of the winning price within 10 days and the rest by 2027.
Revenue from spectrum suction is also key for the government to adhere to its fiscal deficit — the measure of the amount of money the government borrows to fund it expenses — target. “We participated in the recent spectrum auction to ensure continuity of business and service to our customers. We will make a further announcement once the Department of Telecommunications announces the results of the auction,” a Vodafone spokesperson said.