Govt to get around Rs 3,639 crore from CDMA spectrum auction

Last Updated: Mon, Mar 11, 2013 10:38 hrs

The Government will get Rs 3,639 crore from the auction of 800 MHz CDMA spectrum that concluded today.

Sistema Shyam Teleservices (SSTL), the lone bidder in the 800 MHz spectrum band today, has bid for only eight circles. But, the company had submitted application for 11 telecom circles before the auction.

SSTL has not bid for Mumbai, Maharashtra and Uttar Pradesh (East) which accounts for 35.28 per cent of the base price of the 11 telecom circles that the company had intended to bid. The reserve price of Mumbai circle alone is about 23.52 per cent of the reserve price of the 11 circles. These three circles accounts for about 13 per cent of the company's total subscriber base of 12.1 million at present.

SSTL has won by 3.75 MHz of spectrum in Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) & West Bengal in the auction that ended today.

As the company would need to pay 25 per cent of the total bidding amount as the first installment, if it takes deferred payment mode, it would need to pay just Rs 909.75 crore this year. However, this amount would be adjusted with Rs 1,626 crore of licence fee that the company had paid earlier for the licences that were quashed by the Supreme Court oder that cancelled 122 operating permits in February 2012.

This means, the Government would not get any money this year. And the remaining amount after the adjustment with first instalment will be adjusted with next instalment.

"Given the range of variables we have considered and the spectrum cost for 800 MHz, it was a big challenge to arrive at a core list of 8 circles and to bid accordingly. With Rajasthan circle also a part of MTS India's footprint, we would be able to service 40 per cent of country's population, address over 60 per cent of data business potential, safeguard 75 per cent of our current revenues and significantly optimize our losses. Our go forward plan includes building an even stronger MTS brand in the country by focusing on our data centric-voice enabled strategy," said, SSTL president & CEO Vsevolod Rozanov in a statement. SSTL has already closed operations in 10 circles.

The company has also said that about 15 per cent of its 2,850 employees are in the three circles it did not bid today. "Full efforts are being made to absorb maximum number of employees in other circles. In-addition, care is being taken to place some of the employees in other Companies. The Company will also be closely working with all its local partners to address their concerns," SSTL said in a statement.

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