Spectrum auction not a failure, asserts Communications Minister

New Delhi, Oct 7  Trying to brush aside criticism about the just-concluded telecom spectrum auction, Communications Minister Manoj Sinha said on Friday the bidding process was not a failure.

"It is highest ever sale in the last four years of auctioning. In this year we sold around 965 MHz of spectrum," Sinha said at a press conference.

He also said this particular auction could not be compared with those in previous years where there were many licence renewal cases. "This was not an auction for survival. This auction will help companies strengthen its network."

The minister, of course, glossed over the fact that only 41 per cent of the 2,354 MHz on offer was sold. Also, compared to the total expected revenue of Rs 5.66 lakh crore ($88.5 billion), only about 11.6 per cent or Rs 65,789 crore ($9.8 billion) was raised in 31 rounds of bidding. Most industry players agree that this could hardly be called a success.

In 2012, the government auctioned 390 MHZ, out of which it sold 127.50 MHz (32.6 per cent); in 2013, of 195 MHZ on offer, it sold 30 MHz (15.4 per cent); in 2014, 431.20 MHz was put on block and 353.20 MHz (82 per cent) was picked up and in 2015, 470.75 MHz was offered, out of which 418.05 (89 per cent) MHz was sold.

The auction's failure has been attributed to the high reserve price decided by the regulator and approved by the central government.

"The auction was conducted in a smooth and transparent way and after this auction there will be no such thing like call drops," the minister said.

The auction was held for seven bands --700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. There were no takers for 700 MHz and 900 MHz -- as experts and the industry alike had warned.

The total upfront payment due to the government from this auction is around Rs 32,000 crore.

Talking about the high price of 700 MHz band, which saw no takers, the minister said perhaps pricing was an issue an "appropriate eco-system for 700 MHz is also needed".

For the Delhi circle, the reserve price for 700 MHz was pegged at Rs 1,595 crore per MHz -- which was the highest. For pan-India, the reserve price was Rs 11,485 crore per MHz. Of the 770 MHz on offer, none was picked up.

Asked whether the government's budgeted target of Rs 98,994.93 crore from auction procedures this fiscal (till March 31, 2017) will be met, Sinha said: "Largely, it will be achieved."