Govt hopes to get Rs 30,000 cr from remaining auctions

Sibal takes centre stage, explains his ministry's calculation of the value of unsold specturm in 1,800 Mhz, 800 Mhz apart from base price of 900 Mhz

The Government today put up a brave front saying that they would be able to meet their budgeted target of getting Rs 40,000 crore from the telecom sector this financial year even as the response to the recently concluded 1,800 Mhz auction which ended on Wednesday was lukewarm. 

Addressing a press conference Finance minister P Chidambaram  who is also the head of the empowered group of ministers on telecom announced that it will work out the modalities for re-auctioning of the four circles of Delhi, Mumbai, Karnataka and Rajasthan in the 1,800 Mhz space where there were no bidders and also spectrum in the 800 Mhz CDMA band where there were no takers.

The government will also put up for auction the 900 Mhz band which is coming up for refarming, before the deadline stipulated by the regulator which is  May 2013. This spectrum is held by incumbent operators apart from BSNL and MTNL and the government has decided to refarm this spectrum to 1,800 Mhz, permitting the operators to keep only 2.5 Mhz.   

"The auction process has not ended. There will be another auction for the unsold spectrum before 31st March 2013. We are hopeful we will be able to achieve the target." said Chidambaram. 

Explaining the reason for the government confidence in achieving the target  Communications minister Kapil Sibal said that according to his ministry's calculation the value of the unsold spectrum in the 1,800 Mhz and 800 Mhz band apart from the base price of 900 Mhz band (1.3 times of 1,800 Mhz spectrum) which will be refarmed is Rs 62,000 crore.  "Even if we get 50 per cent of this value at base price  it would give us somewhere around Rs 25,000 crore to 30,000 crore. That will be good enough for us to reach the target" said  Sibal.

Sibal added that the government has got  Rs 17,343 crore from a combination of auction of 18 circles (Rs 9407.64 crore)  in the 1800 Mhz band and also one time fee in an equal number of circles (Rs 7936 crore) for which the auction price can now be determined. Assuming that it has to adjust around Rs 4,000 crore for the fee which was paid by operators who lost their licence due to Supreme Court order, with their final auction outgo (which includes operators like Videocon, Idea and Telenor), the government would  earn 13,343 crore. Together with what they expect from re auctioning and also auction of 900 Mhz it would mean the government can reach its budgeted target.

However experts say that based on the fact that operators have to fork out only one third of the money upfront (until the rules is changed for the new auction) the Government would not be able to garner more than Rs 11,500 to Rs 13,000 crore at least this financial year based on their expectation.        

Sibal said that the The EGoM  on telecom would meet soon to discuss if it needs to re-price the 2G spectrum in circles which had not takers in 1800 band as well as pricing of CDMA spectrum.

The two bigwigs of the UPA government also attacked the Comptroller and Auditor General of India saying that its assessment of a presumptive loss to the exchequer was not borne by the auction results. “The 2G scam of Rs 1.76 lakh crore is a pure myth,” said the finance minister. Sibal added" "Where is this Rs 176,000 crore scam which every one was talking about some time ago. In the case of 3G, though the government got revenues of over Rs 100,000 crore but there was not rollout, so the biggest loser was the common man who was deprived the benefit of a service.”  

Sibal also said that if the government would have been worse off had it accepted the TRAI recommendations-which were steep- without bringing them down. “The results of the recent auction of 2G spectrum could have been worse if we had stuck to the price band recommended by Telecom Regulatory Authority of India (TRAI). ” TRAI had recommended a base price of Rs 18,000 crore for 5Mhz of 1800 band spectrum, the government bought it down to Rs 14,000 crore.

The Telecom minister also pointed out that its hands  were tied in formulating the auction rules. "The recent auction is lesson for all of us that contours of institutional responsibilities should be allowed to function. In retrospective all I can say that policy making should be best left to the government of the day". 

The Supreme court which cancelled 122 licenses of operators who were given licences in 2008 had directed the TRAI to make recommendations for auctioning of the cancelled spectrum and gave the government a deadline to complete the whole process. .