NEW DELHI: In a virtual repeat of last November's spectrum auction, the second round of airwaves set to be put under the hammer has also failed to enthuse telecom service providers. Monday was the last day for registering to take part in the spectrum auction, which will take place next month. While nobody applied for GSM waves, Russian conglomerate
Sistema Shyam was the sole applicant for the 800 Mhz band spectrum used by CDMA operators.
Telecom operators said despite the government reducing the base price for spectrum, the cost remained high and made little business sense. "The high reserve price is clearly out of sync with the market reality. Plus, there is the overhang on 900 Mhz spectrum where there is a legal question over refarming," said Rajan S Mathews, director general of Cellular Operators Association of India, the industry lobby group representing the GSM operators.
On March 11, the government will begin with auction of spectrum in 1,800 Mhz band for three circles that did not find any takers in the first round, which will be followed by sale of airwaves in 800 Mhz band where Sistema Shyam is the sole bidder. Already, the company has announced its intent to walk out of 10 circles. At the end, the auction for 900 Mhz spectrum will take place where the reserve price has been fixed at twice the level for 1,800 Mhz.
Telecom operators such as
Vodafone have challenged the legal validity of government's move to opt for refarming, which means switching them from 900 Mhz band to 1,800 Mhz band and then asking them to bid afresh for spectrum vacated by them. The executive with a leading mobile company said one of the reasons for the poor response was the calculation that the government may reduce the base price further.
This lukewarm response now threatens to impact the government's attempt to cut fiscal deficit by raising almost Rs 40,000 crore from the 2G spectrum auction. Last November's auction had yielded Rs 9,400 crore and there were no bids for high density circles of Delhi, Mumbai, Karnataka and Rajasthan. The spectrum that remained unsold last November and also the one that is with the operators, who need to renew their permit in 2014, is to be sold next month.
The government was to auction 15 MHz of radio waves each in Delhi and Mumbai in the 1,800 Mhz band, that is used for 2G GSM services, as against 4.4 Mhz and 13.2 Mhz respectively released in these circles through permits, which were quashed.
The Supreme Court had last February cancelled 122 2G telecom licences. While 514.8 Mhz of spectrum was freed up as a result of this cancellation, the government put up only 271.25 Mhz of spectrum for auction in November 2012.
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