2G auction fetches government Rs.3,500 crore

Sistema Shyam Teleservices was the only bidder and won air waves in eight telecom service areas

First Published: Mon, Mar 11 2013. 02 32 PM IST

Sistema Shyam had applied for spectrum in 11 circles but bid for eight, which means the company will shut operations in Mumbai, Maharashtra and eastern Uttar Pradesh, the officials said. Photo: HT

Updated: Mon, Mar 11 2013. 03 05 PM IST

New Delhi: An auction for radio spectrum on the 800MHz wave length fetched the government around Rs.3,500 crore after three rounds of bidding, but was barely one-tenth of what it had hoped to raise.

Sistema Shyam Teleservices Ltd was the only bidder and won air waves in eight telecom service areas, according to two officials of the department of telecommunications, who spoke on condition of anonymity.

“The process had to be followed” even if there was just one bidder, one of the officials said. Sistema Shyam won permits to use the spectrum at the minimum price because there was no competition. The total value of the spectrum is Rs.3,639 crore.

Radio spectrum on 800MHz is used in India by telecom operators to offer voice and data services through the code division multiple access or CDMA technology platform.

The telecom operator had applied for spectrum in 11 circles but bid for eight, which means the company will shut operations in Mumbai, Maharashtra and eastern Uttar Pradesh, the officials said.

Earlier this week, Sistema Shyam had announced that it was closing operations in 10 circles, affecting around 2.2 million subscribers.

The company, however, is unlikely to pay any money for the first seven years of operations as the government has allowed the operator to offset the payment against the Rs.1,500 crore in licence fees that it had paid in January 2008. The permits were cancelled by the Supreme Court in February 2012.

The government has also allowed operators to pay 33% of the winning bid amount upfront and the remaining after a two-year moratorium in equated yearly instalments. This means the government is unlikely to get any money from the auction for the next seven years.

 

Arvind Kumar Pathak

PGDM 2nd