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2G auction is not as hot as it sounded on the cell

Tuesday, 13 November 2012 - 9:30am IST | Place: New Delhi | Agency: DNA
The much-hyped 2G spectrum auction has turned out to be a damp squib with the government receiving bids worth only Rs9,200 crore at the end of the opening day.

The much-hyped 2G spectrum auction has turned out to be a damp squib with the government receiving bids worth only Rs9,200 crore at the end of the opening day.

There was no bidder for pan-India spectrum and no bids were received for the lucrative Mumbai and Delhi circles, besides Karnataka and Rajasthan. Indeed, demand came in only in the second half of the day, for select circles like Gujarat, Uttar Pradesh (East) and Uttar Pradesh (West).

Bids opened at 9am and went on till 7.30pm, at the end of the seventh round of bidding.

“At the end of the fifth round, 95 blocks were bid for, out of the regular blocks and three for the topping up, making a total of 98 blocks, spread over in 18 circles,” telecom secretary R Chandrashekhar had said after the fifth round of the auction earlier in the day.

The auction will commence again on Wednesday, when bids would be submitted in the eighth round.

The government’s flip-flop and the Rs14,000 crore reserve price for 5 MHz spectrum appear to have kept players away, as predicted by some industry officials. Bharti Group chairman and managing director Sunil Bharti Mittal had said last week that the reserve price was “too high” and the auction will be over on the first day itself.

Achieving the target of Rs28,000 crore revenue sure appears to be a tall order now, said analysts.

According to Jaideep Ghosh, director KPMG, the auction is heading for a flop mainly because of the high reserve price. The operators are cautious and would not bid aggressively as the results would affect future auctions.

Mahesh Uppal of Comfirst India also said that it is unlikely the auctions would fetch anything beyond Rs20,000 crore. “This response proves that the estimates of the department of telecommunications and the Telecom Regulatory Authority of India were excessively optimistic.”

For the record, the government was hoping to book an additional Rs18,000 crore from auction of spectrum in the 800 MHz band, where there are now no bidders.

The government has put up 11 blocks for auction in each circle except for Delhi and Mumbai where there are only eight blocks up for auction.


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