New Delhi: When Kapil Sibal said today he was expecting aggressive bidding in the upcoming 2G auctions, was he being optimistic or is he just unable to see the reality?
His misplaced optimism was endorsed by his Cabinet colleague P Chidambaram, who answered a journalist's query on whether the Government still expects to raise about Rs 45,000 crore from spectrum auctions and pricing decisions. "We urge you to join in the aggressive bidding," the Finance Minister said with a wide grin. That government's revenue generation targets from 2G spectrum auctions have gone haywire is by now well known.
Sunil Bharti Mittal of Bharti Airtel had said yesterday that bidding would most likely be over in the GSM space on the first day itself. He also indicated that Bharti's presence in the auctions is a mere token, saying "we are participating because we do not want to be seen boycotting auctions".
To another question on what would Sibal's Telecom Ministry do if some spectrum remains unsold in the auctions, which begin on Monday, the minister said "we will consider that situation when it arises. As of now, this is mere speculation".
The minister also stuck to the projection Firstpost had reported earlier, of raising about Rs 31,000 crore from levy of one-time fee on excess spectrum held by incumbent telecom service providers.
Earlier the Empowered Group of Ministers (EGoM) estimated Rs 30,927 crore revenue generation by levying this one-time fee on both, PSU and non-PSU telcos.
Sibal also announced that the Union Cabinet has agreed to all the decisions earlier taken by this EGoM.
The EGoM had agreed to three things: 1) all telcos can keep 4.4 mhz of initial spectrum and they need not pay anything extra. 2) telcos which hold spectrum in excess of 4.4 but up to 6.2 mhz must pay prospectively. 3) telcos holding beyond 6.2 mhz must pay restrospectively from July 2008. The amount till December 2012 will be determined by indexing prices to current auction prices.
So as per the EGoM's own calculations, telcos will have to fork out Rs 7,890 crore for spectrum beyond 4.4 mhz but till 6.2 mhz; Rs 13,036 crore for spectrum beyond 6.2 mhz. This means total payout for GSM spectrum would be Rs 20,926 crore.
In the case of CDMA spectrum, the EGoM had decided to levy prospective charge on those telcos which hold spectrum beyond 2.5 mhz and here, the amount expected to be raised is Rs 5,938 crore. Another Rs 4,063 crore will flow into Government's coffers through indexing prices between July 2008 and December 2012 for spectrum between 4.4 mhz and 6.2 mhz.
In today's cabinet meeting, three other related decisions on spectrum pricing were also ratified. 1) no telco can acquire another without paying for the latter's spectrum at current prices if that spectrum is beyond 4.4 mhz. 2) spectrum sharing between telcos will be allowed for 5 years, extendable by another 5 years and 3) payment for spectrum can be done in equated annual instalments but the option of lumpsum payment is also available.
The revenue generation target from one-time spectrum fee assumes significance since Government's plan to auction Code Division Multiple Access (CDMA) airwaves has flopped before it ever began, robbing it of potential revenue of around Rs 6,500 crore.
The telecom ministry is scheduled to start from 12 November an auction of airwaves used for GSM-based mobile services, which was to be followed by the CDMA airwaves auction. With the total failure of CDMA auctions and less-than-enthusiatic applications for GSM airwaves, telecom industry analysts have pointed out that based on earnest money deposits made by hopeful bidders till today, the Government will generate less than half of the Rs 45,000 crore target from the entire auction process.
These calculations show that if all GSM hopefuls stay put in the auctions, revenue realised by the Government may be around Rs 21000 crore against the potential revenue (had all players bid for all possible slots) of Rs 34,400 crore. By the same calculation, CDMA revenue potential was Rs 13,650 crore but from EMDs, it had whitteled down to Rs 6500 crore.
Sibal meanwhile also announced that CDMA spectrum will see a round of auctions after a new set of conditions is approved but did not say when. He also made it clear that since there will not be a CDMA auction discovered price soon, the Telecom Ministry will approach the Cabinet with an interim formula for one-time fee payment by telcos which hold over 2.5 mhz of spectrum.
Updated Date: Dec 20, 2014 13:33:36 IST