The Telecom Ministry had high expectations from the 2016 telecom spectrum auction but all it hopes were dashed to the ground as the auction struggled to reach just 11.6% of its revenue target of Rs. 5.66 lakh crore.
Too high reserve price for the premium telecom bands is said to be the main reason behind this failure. The telecom regulator miscalculated the reserve price for various bands which got them ignored by the participating telecom operators.
“It is a failure to an extent. The largest chunk of spectrum didn’t find any buyers because of serious miscalculation by the regulator and the central government on the current market value of 700 MHz spectrum. They overpriced it and the players decided to wait till the price becomes more realistic,” said Mahesh Uppal, Director of Com First.
40% Of Spectrum Was Sold At Rs. 65,789 Crore
Only 965 MHz of spectrum got sold for Rs. 65,789 crore out of the total 2,354 MHz of spectrum put on auction by the telecom ministry. Interestingly, out of this Rs. 65,789 crore, Rs. 53,000 crore (approx.) was sold on the first day of the spectrum auction.
It is worth noting that the Government planned 31 rounds of bidding for the 7 telecom bands- 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, and 2,500 MHz. However the auction was called off in just 5 days due to lack of interest.
The Government of India (GoI) also had a revenue target of Rs. 98,994.93 crore in its fiscal budget against ‘Other communication services’, but due to the failure of the telecom auction the Government wouldn’t be able to achieve its revenue target.
There were no takers for the 700 MHz and 800 MHz telecom bands.
“Since the 700 MHz spectrum is not usable now, it’s was a risk for the companies,” Uppal added.
Despite this poor show, the communications minister tried to end the auction on a positive note by announcing that in comparison to the previous auctions the government generated the highest revenue from this auction.
“This is the highest ever amount garnered in the last five years. This is a cause of happiness. It’s a big achievement that we could sell 965 MHz, which is more than the cumulative amount sold since 2012,” said Communications Minister, Manoj Sinha.
It is worth noting that the telecom operators had already requested the Government to not auction the premium 700 MHz due to the lack of required ecosystem.
Airtel shelled out Rs. 14,244 crore for the spectrum, Reliance Jio Rs. 13,672 crore worth of spectrum, while Idea spent Rs. 12,798 crore for telecom spectrum. Vodafone hasn’t shared any detail about their purchase, by the time of writing of this report.