The 2G spectrum auctions, which got over on just the second day of bidding, may generate less than a fourth of the revenue target initially set by the government.
According to reports, the auctions themselves would generate only about Rs 9400 crore in revenues for the government but if the government honors its commitment of refunding license fee to those telcos who lost licenses after the Supreme Court judgement of February this year, the revenue earned would be quite paltry.
As per industry estimates, if the government refunds this money to all eligible telcos, it will have to fork out Rs 7,211 crore out of the Rs 9,400 crore it will earn. So where does this leave the ambitious target of generating Rs 40,000 crore from spectrum auctions in this fiscal?
Reacting to the dismal industry participation in auctions, GSM lobby group Cellular Operators Association of India (COAI) said this evening that there were three reasons for the dismal response to auctions for 1800 mhz spectrum: artificially high reserve price of Rs 14,000 crore for 5 mhz of spectrum; participation in auctions by only those telcos which had lost licenses and were compelled to win back spectrum to stay in business; and creation of artificial scarcity by the government since it did not put up all available spectrum for auctions.
Terming the offer by the government to liberalise spectrum as another red herring, COAI said, "All spectrum held by GSM operators has already been liberalised as per the existing License conditions."
The association also made it clear that had the government harmonized the spectrum to international standards and allowed for Extended GSM to be provided on the 800 MHz spectrum, there would have been bidders even in the CDMA band.