Lukewarm response to 2G auction

The government's bid to auction 2G spectrum got a lukewarm response on Day One with telecom operators opting to ignore key circles such as Delhi, Mumbai, Gujarat and Karnataka, even as Bihar emerged as the hottest service area, receiving the maximum interest.

After seven rounds of bidding, the government had received bids that added up to over Rs 9,200 crore. "Fifty-five to 60% of what had been put up for auction has been bid for," telecom secretary R Chandrashekhar said after five of the seven rounds had been completed.

The government believes that the response would pick up in the coming days.

Govt expects 2G auction to pick up soon

The 2G spectrum auction, which received a tepid response from telectom operators on Monday, is likely to pick up in the coming days, the government feels, as Telenor, Videocon and Idea Cellular battle it out to retain spectrum that they stand to lose after a Supreme Court order cancelled the airwaves and licences that was awarded to them controversially by former telecom minister A Raja. While Telenor and Videocon would look to have a pan-India footprint covering all the 22 circles, Idea would be interested in getting a grip over seven circles where its services would be terminated.

Only Bharti Airtel and Vodafone are looking to buy top-up spectrum in a few circles. The auction has no timeframe and will continue for as long as even one of the companies shows interest in bidding for spectrum in one of the circles.

There is a view that the auction, being conducted under the Supreme Court's prodding, may not be well timed given market conditions, reluctance of some of the older players to participate and the precarious finances of newer operators.

While the government, though taken aback by the response, was hoping of a favourable result, telecom companies seemed to suggest that the final word has already been said.

"We said the high reserve price would ensure that limited players come into the bid, and that there would be several circles that would have no bidders. That is exactly what we are seeing now," COAI general secretary R S Mathews said.

The government had set a reserve price of Rs 14,000 crore for 5 mega hertz of spectrum across all circles, which is seven times what was fixed in 2001.

In fact, even within the government, there is a view that the entire process was being rushed through under pressure from the SC. In fact, sources said the telecom department was shy of telling the court that this may not be the best time just as 3G auctions were postponed after the collapse of Lehmann Brothers.

For the government, the success of the auction is critical to meet its fiscal deficit target as it had budgeted for Rs 40,000 crore from the sale of spectrum.


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