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Expect 40,000 Crore From Spectrum Auction In January: Telecom Secretary

Expect 40,000 Crore From Spectrum Auction In January: Telecom Secretary

teleNEW DELHI: India aims to earn Rs. 40,000 crore from the bandwidth auction scheduled for January, telecom secretary MF Farooqui said on Monday, reflecting optimism in the government after it slashed starting prices for the sale recently.

 

However, there are fears that the auction — slated to start on January 21 — could itself get delayed as the panel of ministers meeting for finalising the contours of merger & acquisition (M&A) rules has been further delayed, a senior official said separately. The inter-ministerial panel was scheduled to meet on December 3. A new date has not been fixed so far, the official added.

 

Speaking to reporters, Farooqui said that the merger and acquisition guidelines — that are being keenly awaited by the industry — will be out before the auction begins. The industry has been demanding that government issues M&A guidelines before the legal document is put out, so that they can make informed decisions regarding the auctions. The government has said, it intends to finalise the M&A guidelines before the notice inviting applications (NIA), a legal document which lays down the rules and regulations of the auction, are released. According to internal government documents, the NIA is to be released by December 16.

 

The government is desperate for the auction to succeed as it needs funds to limit its budget deficit. “We will exceed whatever is the budget provision for the receipt of money from auction for this year (Rs. 11,000 crore). The total amount will be much more than that, around Rs. 40,000 crore,” Farooqui said.

 

The previous two rounds of auction had fetched only about Rs. 12,000 crore, less than a third of the government’s estimates, as most operators stayed away, citing high base prices.

 

The government had set a total revenue target of Rs. 40,874.5 crore this financial year through March 2014 from spectrum, including proceeds from auctions, onetime spectrum charge that companies will have to pay for airwaves they hold and annual licence fee.

 

However, the first auction in November 2012 turned out to be a damp squib with only Rs. 9,407.6 crore coming to the kitty while second round in March this year brought only Rs. 3,639 crore.

 

Telecom department (DoT) officials had earlier expected that the third auction round will generate about Rs. 11,000 crore, but they now expect the third round proceeds to reach the overall annual target. Farooqui added that DoT would be able to sell the entire spectrum which will be put for sale in the auctions scheduled to start on January 21. According to internal documents, DoT intends to put 285 MHz of 2G airwaves on the block.

 

The Empowered Group of Ministers had recently approved the price recommended by telecom commission, DoT’s highest decision making body, that suggested cutting the pan-India floor price in the 1800 MHz band by about 26%, and the base price for Kolkata, Mumbai and Delhi in the 900 MHz band by nearly 53%, both compared with the March levels.

 

“Whatever is required to be done — be it M&A norms, 800 MHz auction, quantum of spectrum to be sold, spectrum trading norms — all must be made clear in the NIA, before the auction for productive and conducive participation from the operators,” said BK Syngal, senior principal at telecom consultancy firm Dua Consulting. “Otherwise the government may face yet another failed auction. If this can’t be done, then auction should be delayed.”

(Source: The Economic Times, December 3, 2013)

 

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