2G auction over, Sistema gets 8 circles, no bids for Mumbai

The second round of 2G spectrum auction for CDMA services ended this morning with sole bidder Russian conglomerate Sistema’s Indian unit SSTL bagging eight circles.

The telecom major has bid for eight circles in the 800 MHz spectrum auction, while the other 12 companies in the market, including RCom and Bharti Airtel are skipping the auction due to the high spectrum floor price. “They’re all lying in a bed of uncertainty which isn’t getting any clearer,” Harit Shah at Nirmal Bang Institutional Equities, was quoted as saying by Bloomberg. “Since the Supreme Court’s order, it seems like every move by the government has helped kill India’s golden goose then knocked over its eggs.”

According to a report the Economic Times, the government received bids for Rs 3,639 crore from SSTL.

Sources said the government received bids for three blocks in each of eight circles, including Delhi. There were no bids for Mumbai, Maharashtra and UP East.

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Government had put on block CDMA spectrum worth Rs 6,400 crore.

Sistema Shyam Teleservices Ltd (SSTL) has deposited Rs 613.75 crore for the auction, according to information disclosed by DoT. This makes the company eligible to bid for minimum quantum of 2.5 Megahertz spectrum (two blocks of 1.25 Mhz airwaves frequency) in 11 circles. However, it has bid for only eight circles, which implies it may shut shop in another circles.

The company has already announced discontinuation of services in 10 out of 22 telecom circles - Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East, Orissa and Punjab.

It is a legal requirement for SSTL to get spectrum through auction if its wants to continue its operations in 21 out of 22 telecom service area where its permits were cancelled by Supreme Court in February 2012. The apex court judgement, however, has no effect on its permit to operate in Rajasthan.

After today’s auction, the government will go back to the Supreme Court for further directions, Telecom Minister Kapil Sibal told reporters last week after a meeting of the Empowered Group of Ministers (EGoM) on spectrum, headed by Finance Minister P. Chidambaram.

Three bands - 800MHz (used for CDMA services), and 900 MHz and 1800 MHz (both used for GSM services) - were to be auctioned this month, but there has been lack of interest from telecom firms yet again, indicating that the government may have to cut down prices further to attract interest.

According to provisions, auction can extend beyond 60 minutes only if there are competing bids and today’s auction could end as the shortest online sale of radiowaves in terms of time consumed.

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The auction for 2G spectrum for GSM players held in November last yeat was spread across three days fetching the government Rs 9,407 crore. The CDMA sale did not take place in November as there was no participant due to high cost.

Government has since then reduced the spectrum base price by 50 per cent but still no company, except SSTL, has shown any interest.

In 2010, spectrum auction for 3G services ended after 34 days and 183 rounds of bidding. This was followed by 16-day long auction for wireless broadband (BWA) spectrum. Auction for 3G and BWA spectrum had fetched government
over Rs 1 lakh crore.

With inputs from Agencies