The 2G spectrum auction, which was expected to contribute Rs. 40,000 crore to the exchequer, is now struggling to mop up even half the amount.
With no new operator applying for pan-India spectrum for providing GSM services and no bidder for spectrum in the 800 MHz band on which CDMA services are given, the November 12 auction is likely to be a lukewarm affair.
While it is likely to lead to a steady rise in tariffs in the long term as competition decreases, the immediate impact on tariffs would be insignificant, say experts.Tata Teleservices withdrew its application for CDMA services on Monday. Earlier, Videocon had also withdrawn its application.
The auction also highlights a shake-up in the industry with only two new players - Videocon and Telenor - participating in the auction.
The other four including Etisalat DB, Loop Telecom, S Tel and MTS are not participating in the auction.
{{/usCountry}}The other four including Etisalat DB, Loop Telecom, S Tel and MTS are not participating in the auction.
{{/usCountry}}Videocon and Telenor are each participating only in 10 circles out of the total 22 in India.
This would provide some relief to existing operators as it was likely to reduce competition in the market. However, it is expected to eventually result in tariff increases.
Idea, Airtel and Vodafone are also participating in the auction.
"Consumers will not have any immediate impact as India is still the most competitive market in the world," said Mahesh Uppal, a Delhi-based telecom analyst.
"The exit of few players will not make a difference. There will still be more than six players in a circle. Rise in prices would be insignificant in the short term. In the long term, there will be a steady increase in prices."