DoT and operator cartelisation blamed for failure of spectrum auctions

21 May 2013

India’s Comptroller and Auditor General (CAG) has criticised recent spectrum auctions, claiming that cartelisation of operators and inaction on the part of the regulator were to blame for the sales’ poor performance, the Hindustan Times reports, citing an internal note to Department of Telecommunications (DoT). The paper quoted the note as saying that the ‘apparent cartelisation by the telecom service providers observed recently in the last two spectrum auctions, wittingly or unwittingly aided and abetted by the inaction/delayed action of the licensor’ had cost the government ‘very dearly,’ as tranches of spectrum valued at hundreds of billions of rupees were left unsold.

The government has so far seen little success in its attempts to sell airwaves in the wake of the mass cancellation of licences in February last year. The spectrum went on sale in November 2012 but limited investor interest saw the auction take in less than a quarter of the expected INR45 billion (USD817.76 million), whilst a second round of bidding in February 2013 attracted just one bidder. Both auctions failed to attract fresh investors, whilst cellcos already operating in the country cut back their footprint, citing high base prices as the reason for the reserved bidding.