2G: Refund of entry fees to telcos to dent govt profit further

The government will seek attorney general Goolam Vahanvati's opinion on refunding entry fees paid by telecom companies in 2008 for licences that were cancelled by the Supreme Court in February.

A top official in the Department of Telecommunications (DoT) said that the Rs 9,407 crore raised through the 2G spectrum auction will not flow into the exchequer entirely since the government needs to refund licence fees to those companies who return spectrum allotted earlier.

Besides, telecom players are allowed to pay only 33 per cent of the due amount in the first year and the rest in installments. In case, telecom companies exercise their option to make deferred payments, the government will get around Rs 1,660-Rs 2,000 crore this fiscal compared to the minimum expected amount of Rs 28,000 crore.

This will include Rs 1,281 crore from companies whose licences were quashed and Rs 379 crore jointly from Vodafone and Airtel in this fiscal on account of their auction wins.

Videocon and Idea Cellular will get an exemption of what they paid in 2008 for spectrum as no inquiry was ordered against them in the 2G scam. Telenor will not get that advantage as it bought spectrum from Unitech Wireless for over Rs 6,400 cr. Unitech is facing probe in the scam. The total amount garnered from the auction for 18 circles is Rs 9,407 crore.

On the poor response to the auction, telecom minister Kapil Sibal had said, "The moment you start in a sense whether directly or indirectly dealing with the market and guiding it in a particular way, lot of trouble which is bound to happen."

He added that the government will take a call on lowering reserve prices for the auction. DoT sources said that the new reserve price of the 2G auction will be announced by early next month.

Videocon, Telenor and Idea were among the firms whose 122 cancelled.

The apex court cancelled 22 telecom permits of Telenor's Indian joint venture Uninor, 21 of Videocon and 13 of Idea.

As per provisional auction outcome, Telenor-promoted Telewings Telewings Communications and Videocon won spectrum in six telecom circles each for Rs 4,018 crore and Rs 2,221 crore respectively. Idea won spectrum in eight circles for Rs 2,031 crore.

Uninor paid Rs 1,658 crore for licences in 2008, Videocon (then Datacom) Rs 1,600 crore and Idea Rs 1,168 crore.

Of 22 telecom circles in the country, bids were received for only 18 circles in the second auction.

Participating companies won spectrum at reserve price fixed by the government in 17 circles. It was only in Bihar that the final bidding price reached Rs 46.43 crore per block of spectrum compared to Rs 42.51 crore fixed by the government. There were no bids received for airwave frequencies in Delhi, Mumbai, Rajasthan and Karnataka.

in association with Mail Today