The much-talked about 2G mobile phone spectrum auction today virtually flopped with just Rs 9,407 crore being garnered in the process contrary to the high valuation estimated by the CAG in its damning report of the government two years ago.
The auction, which lasted just two days, got total bids worth Rs 9,407.64 crore, Telecom Minister Kapil Sibal told reporters at the end of the bidding, which was a far cry from the 35-day bidding for the 3G spectrum in 2010 that got Rs 67,719 crore.
The government was targetting a minimum of Rs 28,000 crore from the sale of 2G spectrum in the GSM band and the tepid response may upset its efforts to meet the revised fiscal deficit target of 5.3 per cent of GDP. Overall, the government had budget Rs 40,000 crore as revenue from spectrum sale this fiscal.
Sibal refused to comment on the CAG's estimation of Rs 1.76 lakh crore as the loss to the exchequer in giving away spectrum on first-come-first-serve basis in 2008.
In an apparent dig at the CAG, he merely said, "the facts are before the nation and quite clear."
Going by the 3G auction price, the current sale should have fetched Rs 1 lakh crore but "what we have got is Rs 9,407 crore... so this is a market and that is how it plays itself out."
None of the five companies bidding for the spectrum made any offer for pan-India airwaves for which the reserve price was set at Rs 14,000 crore, a rate considered high by the industry.
Sibal said in all 101 out of the 144 blocks of spectrum on offer got bids.
Metro cities of Delhi and Mumbai, which accounted for 40 per cent of the base price of Rs 14,000 crore for 5 MHz of 2G spectrum, drew no bids.
The government had put on auction more than half of the spectrum that was freed from Supreme Court in February thisyear cancelling 122 mobile permits issued by the then TelecomMinister A Raja to nine telecom companies in 2008.
The Comptroller and Auditor General of India (CAG) had in2010 said Raja's decision to give away spectrum at rates fixedin 2001 had caused a presumptive loss of Rs 1.76 lakh crore tothe exchequer taking the price garnered in the 3G auction asthe benchmark.
The government thereafter fixed a base at a rate almostequivalent to the third-generation (3G) auction price.
Further, as the government has promised to refund thelicense free paid in 2008, the net gain to the exchequer maybe almost nil.
Dismissing allegations that companies colluded with thegovernment, Sibal said "We have done exactly what the courtsasked us to do. Infact the court asked us to sell (spectrum ata minimum price of) Rs 18,000 crore, we brought the pricedown because we wanted to sell, we wanted companies to buy."
"If we had fixed it at Rs 18,000 crore in terms of whatTrai had recommended, this (even Rs 9,407 crore ) would nothave been fetched," he added.
Lamenting the mess in the sector, Sibal said, "theconsumer has not benefited at all because the nature and thekind of investments that ought to have gone into the sectorhave stopped and the sector has been in debt."
As per the provisional result, Vodafone emerged as thebiggest winner getting additional spectrum in 14 circles ofJammu and Kashmir, Assam, Himachal Pradesh, Uttar Pradesh(East), Uttar Pradesh (West), Madhya Pradesh, Gujarat,Haryana, Bihar, Kerala, Orissa, North East, Punjab and Kerala.
Its market competitor Bharti Airtel managed only in Assamcircels.