2G spectrum auction: India government yet to fix fund raising target

Telecom Lead India: The
last date for submitting applications by telecom operators for 2G spectrum
auction is October 19, 2012 and the government is not able to finalize its fund
raising targets.

The base price is Rs 14,000 crore.

Telecom Secretary R Chandrashekhar said the government is
expecting significant participation from the new operators. Some of the
existing operators which require additional spectrum may also participate in
the auction.

But DoT is unable to finalize its targets as the telecom
industry is currently in the process of evaluating its options. Main operators
are likely to skip the auction as they cannot afford to pay a part of the
spectrum fee. New operators are likely to look at buying spectrum in select
circles. Reliance Industries is likely to look for a pan-India license.

During the 3G and BWA auction in 2010, the government had
set targets and exceeded its expectations. During the auction the government
received more than Rs 1 lakh crore through auction. The interest of Reliance
Industries for bagging broadband wireless auction and 3G operators’ eagerness
to bag 3G spectrum forced several telecom players to pay high spectrum fees.

The current scenario is totally different. There are no
strong indications from existing operators and new entrants (who have lost
licenses after the recent Supreme Court verdict) to aggressively participate in
the November auction. Considering the current business condition, spectrum
auction will become a flop for the government which needs funds to meet its fiscal

Meanwhile, the Supreme Court extended the deadline for
spectrum auction from August 31, 2012 to January 11, 2013.

The operators, whose licences were cancelled by the court
order, will be allowed to offer services till January 18, 2013. This will
benefit Uninor, Videocon and MTS India.

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