Live: Govt. needs to rethink on strategies to meet Rs 40,000 crore target from 2G spectrum auction

Telecom Lead India: India government needs to rethink on achieving Rs 40,000 crore revenue target from telecom sector. It could consider selling its stake in BSNL, MTNL or ITI before March to address fiscal deficit.

P Chidhambaram

Selling government stake in BSNL, MTNL and ITI will bring in fresh life to these companies. These three telecom PSUs need fresh ideas and business plans to survive. Strategic investments will help in revival of these ailing PSUs.

Finance minister P Chidambaram may be considering several other options. India will not become the U.S., where President Barack Obama is talking aggressively about fiscal deficit and its impact on economy. America has China to bail out in several occasions. If the U.S. bleeds, India will be in trouble. Response to India’s 2G auction is one of the examples.

During 2000-01, India government took the right decision to sell its stake in Videsh Sanchar Nigam (now known as Tata Communications) to the Tatas. Government should have divested its stake in BSNL at least five years (before Airtel overtaking BSNL as the number one telecom player) back. MTNL is also bleeding now.

The other option is to offer 4G (not BWA turned TD-LTE) spectrum to telecom players. There will be tremendous demand. Earlier, TRAI said 4G spectrum will be sold in 2014.

Rethinking of strategies is important as the second day of 2G spectrum auction that started at 0900 hours is not offering any good news to the government.

Industry sources say there is some demand for Bihar telecom circle.

A Department of Telecommunications official told PTI that eighth round is in progress. The government is auctioning eight blocks of spectrum having 1.25 megahertz airwaves frequencies in each circle.

The last round of Day 1 (on November 12) saw bids for spectrum only in Bihar circle. Or else it would have ended on Monday itself. The first round could end early today if participating companies do not opt for extension of bid rounds.

Profitability of telecom operators has adversely affected operators’ interest in doing business in India. On top of this, regulatory issues and 2G scam impacted viability of mobile ventures in the country.

Five telecom operators – Bharti Airtel, Vodafone, Telenor-promoted Telewings, Videocon and Idea Cellular – are participating in the auctions.

There was lukewarm response to the auction on Day 1, mainly due to higher base price of Rs 14,000 crore for 5 megahertz airwaves frequency on pan-India basis.

There were no bidders for spectrum in Delhi, Mumbai, Karantaka and Rajasthan.

On Monday, reported that the government is likely to mop up around 50-60 percent (around Rs 20,000 crore) of its target from 2G spectrum auction.

Despite cold response from the entire mobile industry, the telecom ministry headed by Kapil Sibal has set a target of Rs 40,000 crore from the 2G auction.