The government is going all out to replicate the success of the 3G auction in upcoming telecom spectrum bids. The man who was at the forefront of the 3G auction exercise in 2010 is at it again. J S Deepak, a joint secretary in the department of telecommunications (DoT) in 2010, who was later shifted to the commerce ministry, has returned to the DoT with additional charge. The key 3G auction man is heading a DoT committee set up for the smooth conduct of the next auction. He would retain his commerce ministry role.
The proposed auction is a result of the Supreme Court cancelling 122 telecom licences in February over allegations of arbitrary spectrum allocation under former telecom minister A Raja in 2008. The apex court has directed the auction to be conducted by August 31.
With memories of big money (over Rs 1 lakh crore) coming from the 3G and broadband wireless access (BWA) auction in 2010, far exceeding the targeted Rs 35,000 crore, the government is not in a mood to leave anything to chance. All the key ministries and government departments — DoT, the finance ministry, the law ministry and even the Prime Minister’s Office (PMO) — are being kept in the loop on the smallest details related to the auction. After all, the alleged spectrum-allocation scam under Raja, which prompted the Comptroller and Auditor General to peg the loss caused to the exchequer at Rs 1.76 lakh crore, is still fresh in people’s minds.
|3G, BWA AUCTION: HOW IT WORKED
|183 Rounds of 3G bidding spread over 34 days
117 Rounds of BWA bidding over 16 days
Rs 35,000 cr Revenue target from 3G & BWA auction
Rs 106,219 cr Revenue realised
- The auction saw simultaneous ascending bidding online
- Bidders’ names not disclosed during the auction, but applicants’ number was known
- Auctioneers announced a higher price for every round and assessed demand at that price
- Auctions ended when demand was equal to the number of slots available in each service area
Kick-starting the formal process to engage advisors for conducting the auction, the DoT is likely to come out with a request for proposals next week, according to people in the know. Even as the government may chalk out the bid process for a 5-MHz block to begin with, it is looking at a three-year window for fixing the nuts and bolts in spectrum auction across bands. In fact, the Telecom Regulatory Authority of India (Trai), while recommending a steep reserve price at the spectrum auction, advised the DoT to engage an auctioneer for three years.
Since the stakes are high and business potential promising, several international auctioneers and merchant bankers, including from the US, the UK, Europe and Israel, are waiting to join the race to be part of the bid process. International banker and advisor NM Rothschild & Sons and auction consultant DotEcon, who had bid jointly to offer expertise during the 3G auction, are learnt to be in the race for the upcoming auction round. Both companies refused to comment on the matter. Other international bankers and consultants such as Morgan Stanley and Deutsche Bank are also believed to be keen on being a part of the auction process. The interest level in the auction is so high that global teams from banks and advisory firms are already in India, mapping their strategy.
There is a possibility the government may invite separate bids for auctioneers and bankers. A meeting of the Telecom Commission, the highest decision-making body in the telecom ministry, is expected to finalise on April 30 the critical issues related to the auction.
After the Telecom Commission meeting, the DoT views will be sent to Trai for consideration before the regulator issues its final recommendations on the spectrum auction. The Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, will take up the recommendations for a final view.