Business
Crucial auction of telecom spectrum kicks off Wednesday
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 Hol