The government's target of raising about Rs. 40,000 crore from the sale of telecom spectrum during the current financial year has fallen flat.
Revised budgeted receipts from communications services indicates that it will not be able to raise more than Rs. 2,400 crore from airwaves.
The budget envisages Rs. 40,800 crore receipts from telecom for the coming year.
In the last financial bill, the government had budgeted Rs. 58,217.3 crore under other communications services. About Rs. 17,000 crore of this was provisioned from the annual licence fee that operators have to pay, and the rest was to come from the sale of spectrum.
In the wake of the poor response to the recent auctions of airwaves, the government has revised down its expected earnings from other communications services to about Rs. 19,440 crore for the financial year ending March 31, 2013.
It means that the government expects to raise only about Rs. 2,400 crore from the sale of spectrum and from the fee that existing operators have to pay as one-time fee for holding spectrum beyond 4.4 MHz.
The first round of auction was held in November and the government could sell only 55% of the provisioned spectrum. Moreover, there were no bidders in Delhi and Mumbai, where the spectrum is costly.
The government could get total bids worth Rs. 9,440 crore only. However, a significant part of this was to be adjusted against the licence fee submitted in 2008 by two bidders Videocon and Telenor.
The government has also given bidders an option to make deferred payments — operators would have to pay only 33% of the total amount upfront. The rest can be paid in 10 annual installments after a moratorium of two years — the revenue would not accrue in the current year.
The second round of auction will be held on March 11. There are no takers for GSM spectrum in this auction. MTS is the only applicant for 800 MHz spectrum in the CDMA band. However, its initial fee will also need to be adjusted.