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Nov 13, 2012 at 09:01am IST

2G auction heads for a washout as govt falls Rs 30,000 cr short of target

New Delhi: The 2G auction by the government is headed for a washout. Even after the sixth round, the government is almost Rs 30,000 crore short of its budget target of Rs 40,000 crore. So far, the auction has mopped up only Rs 9,224 crore. The Delhi, Mumbai, Karnataka circles found no bidders at all. The auction will now continue after Diwali. The bidding comes after the Supreme Court cancelled 122 licences in February this year.

Eminent lawyer Harish Salve blamed the government's inability to fight the cancellations of 122 licenses and the culture of televised smear campaigns for driving telecom investors away. “Nobody wants to invest in India in telecom. We must also realise that it is due to the very decision to cancel these 122 licenses and the government's response to that decision of complete non-governance, inability to defend its case, inability to portray that it had anything other than pure theft and banditry in its head when it gave the licensees,” Salve told CNN-IBN.

The government on Monday received bids worth Rs 9,224.75 crore on the opening day of auction for 2G mobile phone spectrum that drew scant interest due to high base price. There was no bidder for pan-India airwaves for which the government had set a base or bid start price of Rs 14,000 crore. Demand was concentrated in select circles like Gujarat, Uttar Pradesh (East) and Uttar Pradesh (West).

Of the 22 telecom circles, which cover the entire nation, bids were received for 18, with Delhi, Mumbai, Rajasthan and Karnataka which had the highest base price drawing a blank. "Seven rounds of auction completed today. Auction incomplete and will continue on Wednesday. 98 blocks committed as against 176 blocks offered," Telecom Secretary R Chandrashekhar said.

The bids received for the airwaves amounted to Rs 9,224.75 crore at the end of last round of auction for the day. In the seventh round, there were no bids received for spectrum in UP (W) and Gujarat circle as well. COAI General Secretary RS Mathews said, "The limited amount of spectrum, contrary in our opinion to the SC ruling, was guaranteed to have a very detrimental impact on the auction."

"We said that the high reserve price would ensure that limited players come into the bid and that is exactly what we have seen," he said, adding COAI had rightly predicted no bidders for several circles. The auction, he said, would not last more than two days.

In the seventh round less demand for spectrum was seen in most of the circles, except in Bihar where bids were received for all 8 blocks put up for auction. The last round of the day saw demand for 7 blocks in Assam, 6 blocks each in Haryana, Madhya Pradesh, Jammu and Kashmir, Odisha,West Bengal and North East.

Maharashtra telecom service area received bid for 5 blocks. Andhra Pradesh, Kolkata and Tamil Nadu circle received bids for half of the 8 blocks of spectrum available for bidding. Uttar Pradesh (E), Himachal Pradesh, Kerala and Punjab received bids for only one block. Earlier demand was seen for 10 blocks in UP (W), 9 blocks in UP (E) 7 blocks in Assam.

Telecom experts are of the view that the auction price may not meet revenue target set by government and even adversely impact revenue target of Rs 31,000 crore set by it from one-time spectrum for excess spectrum held by telecom operators. "The government may have to face issues regarding market discovery of price regarding excess spectrum that operators hold specially in circles where there were no bids and issues regarding the governments overall revenue generation target wherein there is a large gap to bridge," Protiviti Consulting's Country Managing Director Mritunjay Kapur said.

(With additional inputs from PTI)