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Corporate Nov 22, 2012

2G auction: At Rs 3,104 cr, govt's gain way below expectation

By Sindhu Bhattacharya

New Delhi: If all the telcos which placed bids in the just-concluded 2G spectrum auctions were to opt for a deferred payment schedule, the government will get only Rs 3104.5 crore this fiscal against the Rs 9,408 crore it was hoping to garner. And if it actually allows offsets against the license fee telcos paid earlier - a decision which is yet to be finalised - it may actually end up generating very little money from these auctions.

According to the final payment schedule uploaded on the website of the Department of Telecom late this evening, the telcos are together bound to pay only a third of the promised Rs 9,408 crore this year.

And industry sources tell us that an offset policy, if it is approved, will mean telcos like Videocon Telecommunications and Idea Cellular will have to pay almost nothing for the next four-five years. That is because in the case of Videocon the entire Rs 1,650 crore paid as license fee earlier may be offset while for Idea the amount may be slightly less.

These sources said Telewings (the joint venture company which participated on behalf of Telenor) will not get any offset but this could not be immediately confirmed from Telewings.

The offset amount is applicable to those companies which lost licenses in the wake of the Supreme Court judgement of February this year which cancelled 122 licenses allotted by former telecom minister A Raja. So companies which lost licenses then may be allowed to offset the license fees paid at that time against the spectrum costs payable now.

Representational Image. Reuters

Given the even more dismal collection from auctions than projected, it becomes all the more imperative for the government to conduct fresh auctions in top circles where no bids were received such as Delhi and Mumbai.

The industry has already indicated the reserve price for these circles should be substantially reduced to ensure that the second auction process does not meet the fate of the first.

According to the final payment schedule put out by DoT today, Bharti Airtel has to pay Rs 8.67 crore for Assam circle; Idea Cellular has to pay Rs 2031.31 crore for eight circles of Assam, Bihar, J&K, Kolkata, North East, Orissa, Tamil Nadu and W Bengal. Vodafone South has to pay Rs 1127.94 crore for Assam, Bihar, Haryana, Himachal, J&K, Kerala, Madhya Pradesh, North East, Orissa, Punjab, Uttar Pradesh East and West, West Bengal. Videocon has to pay Rs 2221.44 crore for Bihar, Gujarat, Haryana, Madhya Pradesh, Uttar Pradesh East and Uttar Pradesh West.

Telewings Communications has to pay Rs 4018.28 crore for AP, Bihar, Gujarat, Maharashtra, UP East and UP West.

by Sindhu Bhattacharya

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