Crucial auction of telecom spectrum kicks off Wednesday

New Delhi: The finance ministry is expected to closely watch the e-auction of radio frequency spectrum, our airwaves, for telecom operators that commences Wednesday, seen as crucial for the government to be able to meet its fiscal deficit target of 4.1 percent of GDP.

A mock auction was conducted Tuesday. “It went off smoothly. We are all set for tomorrow,” a senior official in the Department of Telecommunications told IANS.

The government is being advised on the process by Mjunction Services, an information technology and internet company promoted 14 years ago as a 50:50 venture by Steel Authority of India Ltd and TATA Steel.

The reason why the auction is crucial for the government is: It has budgeted for Rs.43,161.72 crore non-tax receipts under “other communications”, which includes proceeds from this process, entry fee from new operators and related levies.

Accordingly, collections from spectrum assume greater significance since the fiscal deficit target of Rs.512,628 crore, as per the revised budget estimates has already been breached in the first 10 moths of this fiscal, as pr the official auditor.

The latest data by the Controller General of Accounts shows that the deficit during April-January 2014-15 was Rs.568,000 crore, reaching thereby nearly 110 percent of the original budget estimate.

In 2013-14, the government was able to garner Rs.40,113 crore from communications.

In the latest round of auctions, a total 103.75 MHz has been earmarked in the 800MHz band, 177.8 MHz in 900MHz band, 99.2 MHz in 1,800MHz band and 5MHz in 2,100 MHz band.

Eight companies are in the fray – Vodafone, Bharti, Idea, Telewings, Aircel, Tata Tele, Reliance Communications and Reliance Jio. The auction is crucial for some of them as their 20-year licence term draws to a close in December.

These eight companies have submitted an earnest money of Rs.20,435 crore. Experts say this indicates the bidding will be quite fierce since the amount submitted is at least 2.5 times the minimum required, with Reliance Jio at the top.

As per estimates, at the base price alone, the auction will translate into some Rs.82,000 crore, even as the actual process is estimated to fetch around Rs.100,000

For the record, the matter of auction is under litigation even before it began. But the Supreme Court has permitted the Department of Telecom to go ahead with the process from Wednesday and await its directions before finalisation.

What is of concern is: The 2010 auctions took 34 days and 183 rounds of bidding. The one in 2012 lasted two days while a year later it took just over four hours, but these were smaller ones. In 2014, it took place over 10 days with 68 rounds.

Officials said the latest round will be conducted between 9:00 am and 7:30 pm. Monday through Saturday, including the public holiday March 6 on account of Holi.