NEW DELHI: India yesterday began auctioning mobile spectrum reclaimed after the Supreme Court scrapped licences due to a graft-tainted allocation process, but the process drew a lukewarm response.
Prime Minister Manmohan Singh’s government hopes to raise `400bn ($7.2bn) from the auction of second-generation (2G) spectrum as it seeks to close a gaping budget deficit.
But industry critics said the starting price of `140bn which the government set was too high and deterred bids.
“The high reserve price has been dampening enthusiasm,” R S Matthews, director general of the Cellular Operators’ Association of India, said, adding the government “will be lucky” if it gets half the sum it is seeking.
“It (the auction) has been going slowly,” a telecom ministry official said, declining further comment.
The lacklustre response contrasts with the 2010 sale of 3G airwaves in which the government raised more than $12bn.
Two foreign operators - Norway’s Telenor and Britain-based Vodafone Group - and three domestic firms -- Bharti Airtel, Idea Cellular and Videocon Industries - are taking part in the auction.
The auction is crucial for companies such as Telenor’s Indian unit and Videocon, which both lost their telecom permits, as well as for Idea Cellular, seven of whose licences were revoked by the Supreme Court.
The companies are allowed to continuing supplying services under their cancelled permits until mid-January.
Early this year, the Supreme Court cancelled 122 licences issued to eight companies in 2008 after it ruled the government under-priced the permits and cost the exchequer as much as $39bn in lost revenues.
Bharti and Vodafone were not hit by the court order. But they want more bandwidth to improve service as mobile firms in India battle to win new clients in the world’s second-largest cellular market.
Nineteen people including a former telecoms minister, senior bureaucrats and corporate executives, have been charged with corruption over the 2008 2G sale in what has become one of India’s biggest-ever political scandals.
While the 2010 3G auction lasted more than a month, the current auction could be over within a couple of days, industry executives have said.AFP
