2G spectrum: Battle lines drawn as operators prepare for auction

After much dilly-dallying, the government will auction the 2G spectrum freed from cancellation of 122 telecom licences by the Supreme Court in February starting 9 am on Monday.

The Centre hopes to garner around Rs 40,000 crore from the auction.

Total 11 blocks of airwave frequencies in each telecom circle, barring Delhi and Mumbai - where there are only eight blocks - will be up for bidding.

At the end of the auction, telecom companies will have the option to pay full amount of 33 per cent of final price by December 25.

The final price will then determine the amount that government will get from onetime levy on spectrum held by existing operators beyond 4.4 MHz.

The Department of Telecommunications (DoT) will only auction 370 MHz instead of the entire spectrum of 431 MHz freed from cancellation of licences, which belonged to eight telecom players, in a bid to attract high price.

SSTL, which operates under brand name MTS, will not participate in the auction because it is waiting for the hearing of its curative petition before the Supreme Court.

The company maintains that it will continue its operations.

The apex court had allowed companies whose permits were cancelled to get spectrum reallocated for continuing their business if they win rights for airwave frequencies in the auction.

Telecom major Airtel and Vodafone are also participating in the auction to buy additional airwave frequencies.

The industry is unhappy about the auction price. Bharti Group chairman Sunil Bharti Mittal has said that the auction will be over on first day. The last auction of 3G and wireless broadband spectrum took around 50 days.

Director general of Cellular and Operators Association of India Rajan S. Mathews said that the government will be able to rake in between Rs 19,000-Rs 20,000 crore.

The government fixed the starting auction price at Rs 14,000 crore for 5 Mhz of GSM spectrum on pan-India level, which is around seven times more than the price of Rs 1,658 crore at which telecom companies were allotted licences permits between 2001 and 2008.

Auction for CDMA services has already failed after two applicants Tata Teleservices and Videocon withdrew. The government priced CDMA spectrum 1.3 times higher than GSM spectrum.

This auction could have fetched government at least around Rs 13,000 crore.

Sibal has cited recommendations of the Telecom Regulatory Authority of India (Trai) to fix minimum price of CDMA spectrum at double the price of GSM spectrum. According to him, the empowered group of ministers had realised that there will be no taker for these airwaves at Rs 28,000 and hence it lowered it to 1.3 times.

The bid details, including the highest bid value, will be disclosed at the end of each day till the completion of the e-auction, DoT had said. However, the name of the bidder will not be revealed.

In association with Mail Today