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Rediff.com  » Business » Govt gets only Rs 1,707 cr from 2G spectrum auction

Govt gets only Rs 1,707 cr from 2G spectrum auction

Last updated on: December 2, 2012 16:47 IST

Govt gets only Rs 1,707 cr from 2G spectrum auction

BS Reporter in New Delhi

As telecom companies on Saturday made payments for the spectrum they had bid for in the recently concluded auctions of the 1,800-MHz band, the government's total realisation from the process stood at only Rs 1,706.92 crore (Rs 17.07 billion), against the Rs 40,000 crore it had (Rs 400 billion) hoped to garner from the auction and as one-time spectrum fee from incumbent operators.

The five operators who had bid for spectrum were required to fork out Rs 9,407.64 crore (Rs 94.08 billion). However, they were given the options to either pay the entire amount upfront or pay under a deferred scheme in which they had to pay only 33 per cent upfront and get a two-year moratorium to pay the balance in ten equal instalments (with 9.75 per cent annual interest).

According to Department of Telecommunication ( DoT) Secretary R Chandrashekhar, the government received Rs 1,706.92 crore on Saturday. The companies that sought adjustments against the entry fee paid in 2008 (for licences that were quashed following a Supreme Court order) would need to pay the rest of the amount after two years.

However, the government did not allow Norwegian operator Telenor to avail of the adjustments of the Rs 1,658-crore (Rs 16.58 billion) entry fee it had paid in 2008 for pan-Indian licences.

Telenor's Indian unit at present, Telewings, which bagged spectrum in six circles for Rs 4,018.28 crore (Rs 40.18 billion) in the recently concluded auction, was considered a different company from Uninor and, therefore, not eligible for refund. The company that had paid the entry fee in 2008 was called Unitech Wireless.

The licences were issued to Unitech Wireless, which formed a joint venture (Uninor) with Telenor, with the latter holding a majority stake. But, Telenor had parted ways with Unitech Wireless and bid in the auctions through a new entity called Telewings Communications.

"We believe we are entitled to the offset. While we expect DoT to conclude the process soon, we have already made the initial payment for the six circles," said a Telenor spokesperson.

The government has received Rs 1,326.03 crore (Rs 13.26 billion) from Telenor, which is 33 per cent of the final bid amount. When contacted, a spokesperson at Telenor's Indian operations declined to comment.

Bharti Airtel made upfront payment of the entire Rs 8.67 crore (Rs 87 million) for one circle, while Vodafone paid Rs 372.22 crore (33 per cent) of the total bid amount of Rs 1,127.94 crore (Rs 11.28 billion) for the 13 circles under the deferred payment scheme.

Videocon Telecommunication and Idea Cellular, the two companies eligible for adjustment of entry fee paid for the licences cancelled after the Supreme Court order, have asked the government for adjustments. So, both companies did not need to make any payment on Saturday.

The initial payments for these two have been adjusted. Both would need to pay the rest of the amount upfront after two years, or once the moratorium period is over.

Therefore, Idea Cellular, which has won licences in seven circles for Rs 2,031.31 crore (Rs 20.31 billion), will need to pay Rs 670.33 crore (Rs 6.7 billion) after adjustments, while Videocon would have to pay Rs 720.62 crore (Rs 7.21 billion) after set-off.

Videocon Group Chairman Venugopal Dhoot said: "Yes, we have adjusted the licence fee and would pay the rest in line with rules. Clearly, what the government got is much less than what they had expected."

When contacted, Idea Cellular and Vodafone refused to comment on the issue.

The government will also have to refund entry fees of companies like

S-Tel, Etisalat, Loop Telecom, Sistema and Idea. The total outgo for the government would be around Rs 8,000 crore (Rs 80 billion) for refund.




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