The Russian conglomerate is the lone participant in the auction
Russian conglomerate Sistema’s Indian unit, on Monday, won telecom spectrum in eight circles or zones for Rs.3,639 crore in an auction shunned by all other companies.
Sistema Shyam TeleServices Ltd. (SSTL) bid to recover airwaves it lost when the Supreme Court last year scrapped 122 wireless mobile permits amid graft charges.
Telecom Secretary R. Chandrashekhar said the auction ended in just three rounds with lone bidder SSTL putting in bids at the minimum bid price, which had already been cut by about half after no companies bid for the band in November.
In all, 24 blocks in eight telecom circles or zones were allocated out of 61 blocks that were put for auction. “In other words, 40 per cent of the spectrum that was put for auction has been won,” he said.
“In value terms, the value of the spectrum which has been won is around Rs.3,639 crore, which represents little over 56 per cent of the value of spectrum put for auction,” he said.
The government may not get any upfront payment as Rs.1,626 crore has to be adjusted against the license fee SSTL had paid in 2008. The licences cancelled by the apex court included 21 of SSTL.
The auction results may dampen Finance Minister P. Chidambaram’s efforts to garner a reduced Rs.19,400 crore from the spectrum sale this fiscal. He had previously targeted Rs.40,000 crore from spectrum auction to cut the budget deficit. None of the 12 telecom operators in the world’s second-largest mobile phone market, including Anil Ambani’s Reliance Communications and Tata Teleservices, participated in the auction as most of them considered the reserve or auction start price set by the government as too high.
SSTL, which operates on the Code Division Multiple Access (CDMA) platform, said it won spectrum in 800 MHz band in Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal.
“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 eight circles and to bid accordingly,” SSTL President and CEO Vsevolod Rozanov said in a statement.
The firm had deposited Rs.613.75 crore for the auction, which made it eligible to bid for the minimum quantum of 2.5 Megahertz spectrum (two blocks of 1.25 Mhz airwaves frequency) in 11 circles.
SSTL bid for only eight circles, which means, it will have to close operations in Mumbai, Maharashtra and U.P. East, where the company has over 15 lakh subscribers.
The company would be required to pay Rs.3,639 crore for the licence period and the terms include payment of 25 per cent of the final bid amount within ten days, followed by a payment moratorium until March, 2016.
However, the company is likely to opt for full adjustment of Rs.1,626 crore after which it will be required to pay the balance amount in ten annual installments from March, 2016.
Mr. Chandrashekar said the Empowered Group of Ministers, headed by Mr. Chidambaram, would meet soon on the future course of action on unsold spectrum, including GSM radiowaves.