India’s telecom auction process has a long history associated with politics, corruption, and legal cases, writes J Gopikrishnan
The 5G spectrum auction has reaped a whopping sum of Rs 1,50,173 crore for the public exchequer. This massive figure is the highest value collected in India through not only spectrum auctions but also from any kind of bidding process, be it coal or power, or land auctions. As expected, the country’s leading telecom operator Mukesh Ambani-headed Reliance Jio made the highest bid for 5G waves in all 22 circles as well as for other frequencies and paid Rs 88,078 crore.
Jio was followed by India’s first private telecom operator Sunil Mittal’s Bharti Airtel, which made a successful bid of Rs 43,084 crore by competing in all 22 telecom circles. Cash-strapped Vodafone Idea headed by Aditya Birla Group, which continues to struggle with financial woes despite Government’s grand bailout packages, bid only in 17 circles and bought spectrum for Rs 18,799 crore only.
Adani Group also bid for 5G to operate their private network installed in airports, sea ports, and power stations by paying Rs 212 crores for 400 MHz.
As per the convention, Public Sector Undertakings (PSU) BSNL and MTNL did not attend the auction. They will be allotted 5G spectrum at the highest price reached in auction at each circle. Sadly, these two PSUs have not yet optimized the service and even in the usage of 4G. It has to be seen how much time they take to activate 5G on their networks.
Interestingly, the 5G auction turned out to be the only auction where Chinese telecom giants have been kept out from supplying gears, machinery, etc., ringing in cheers for European telecom equipment giants like Nokia, Ericson, and Korean behemoth Samsung.
India’s auction process has a long history associated with politics, corruption, and legal cases. The government decided to conduct the auction for the first time in the telecom sector in 2001. Then India had only four million mobile phone users, and through pan Indian (all the 22 telecom circles) auction, telecom license fee with spectrum allotment arrived at a handsome figure of Rs 1651 crore. Undivided Reliance and Tata Group entered the telecom sector through this process. Earlier, players like Airtel and BPL were cajoled by the Government to enter the sector in 1994 at a very low price. Those were the days when the incoming call rate was Rs Eight and outgoing Rs 16 per minute on a minuscule customer base.
While the ruling BJP rejoiced over the final figures of the 5G auction that came out on August 1 after four days of bidding, 2G Scam-hit former Telecom Minister A. Raja got his chance to take a jibe at the NDA government. Raja called for a probe into the auction asserting that the 5G spectrum should have been sold for Rs 5 lakh crores. Raja compared the 5G spectrum amount of Rs 1.5 lakh crore with the notional loss of Rs 1.76 lakh crore in the 2G auction during his tenure as calculated by the CAG and said that 5G has more spectrum, it should have fetched more for the government.
“When I recommended only 30 MHz of spectrum to TRAI, the regulatory authority, the then CAG Vinod Rai said ? Rs 1.76 lakh crore loss to the Government. But now 5G only for Rs 1.5 lakh crore?” Raja asked.
Raja and several other Opposition leaders vented their anger against the then CAG Vinod Rai for “sabotaging the UPA regime” and providing a platform for the rise of the BJP by alleging a scam in the 2G auction. These allegations are laughable given the gross procedural irregularities in the allotment of the spectrum during Raja’s regime.
Auction of Spectrum, Coal and natural resources
The Government was forced to conduct a 3G and BWA spectrum auction in April 2010, when the 2G Scam of 2008 made headlines. The scam-hit UPA Government formed a Group of Ministers headed by then Finance Minister Pranab Mukherjee, sidelining Telecom Minister A. Raja and the public exchequer got a huge sum of Rs 1,06, 200 crores. This figure ignited the anti-corruption wave and opposition demanding the removal of Telecom Minister A Raja who allotted 2G Spectrum and 122 licenses to many companies, most of them from real estate sectors, at a throwaway price of just Rs 9, 200 crores.
Raja gave telecom licenses and spectrum without auction in 2008 at a price arrived in 2001. In 2001, the pan-Indian license (total 22 licenses) value was Rs 1651 crore when India had just four million mobile phone users. But in 2008, India’s number of mobile phone users crossed 300 million, and the Minister, ignoring Prime Minister Manmohan Singh’s direction, gave away licenses and spectrum at a seven-year-old fixed rate. Among the 122 licenses, around 86 licenses , did not get clearance from the Regulator TRAI to start a telecom business.
By that time BJP leader Subramanian Swamy and lawyer Prashant Bhushan approached the Supreme Court demanding the cancellation of all 122 tainted licenses granted by Raja and conducting fresh auction. The CBI in its FIR in 2009 on the 2G Scam pegged the loss to the public exchequer at 30,000 cr. Things got murkier when the beneficiary companies started selling their shares to multinational companies for huge premiums. For example, Swan Telecom sold around half of its shares to UAE telecom giant Etisalat for more than Rs 4,500 crore.
How CAG arrived at the loss figure of Rs 1.76 lakh crore?
In November 2010, the CAG submitted a report to Parliament outlining the illegalities in the 2G Scam allotment and claiming a notional loss of Rs 1.76 lakh crore in the auction. For this, CAG Vinod Rai was maligned and bullied by Congress and DMK MPs in JPC and PAC and in the public domain. How the auditors finalised the loss figure is a matter of record in the CAG’s depositions before JPC and PAC. The auditors had derived around 10 types of rates for calculating the expected loss to the public exchequer.
The figures were based on the sale of shares to multinationals by the beneficiary companies in the 2G scam and the companies reaping the benefit of Dual Policy (Anil Ambani’s Reliance, Tata, and Shyam Telecom). Somehow probes against the Dual Policy, the fountainhead of 2G Scam fizzled out. The lowest loss figure arrived at was a Rs 60,000 crore loss based on the sale of shares of Swan Telecom to Etisalat. The highest loss figure arrived at was Rs 4.25 lakh crore based on the sale of Tata shares to Japanese firm DoCoMo. As this price was based on the brand value of Tata, the auditors did not consider it.
At last CAG auditors after deliberations decided to stick to the rates of the 3G and BWA auction of April 2010, and based on these rates the 2G Scam loss was estimated at Rs 1.76 lakh crore. Interestingly, the BWA spectrum was later conveniently termed the 4G spectrum. This was seen as a real Indian Jugad. In February 2012, Supreme Court cancelled all 122 licenses allotted by Raja and ordered an immediate auction and also called for an auction of all natural resources, later leading to the cancellation of all coal blocks. The Government went for Presidential Reference in the Supreme Court, which justified its decision to auction all natural resources in place of arbitrary allocations.
Many of the operators and the authorities resorted to every possible trick to sabotage the first auction in November 2012 after the Supreme Court verdict of Justices GS Singhvi and AK Ganguly. Airtel’s Sunil Mittal even said the auction would not last a day. But just 19 licenses were sold at Rs 9400 crore, while in 2G Scam 122 licenses were given away arbitrarily for just Rs 9,200 crore.
The merit of the auction can be seen in the rise of rates from 2014 onwards. In February 2014, the spectrum auction bagged Rs 62,162 crore to the public exchequer and the rates were higher than the 2010 3G auction, justifying the CAG’s loss figure based on the 3G auction rates. In March 2015, the spectrum auction fetched the government Rs 1,10,000 crore, and in December 2016 the spectrum auction brought in Rs 65,789 crore to the public exchequer.
Again in March 2021, the spectrum auction gave Rs 77, 814 crores whereas the recent 5G auction provided the highest figure Rs 1,50, 173 crores, totaling around Rs 5.9 lakh crores to the public exchequer by auction.
When will 5G service will be available in BSNL and MTNL?
The full optimization of 5G technology will be reached only when the country’s BSNL and MTNL are equipped with the 5G technology. It is high time for the merger of BSNL and MTNL by delisting MTNL from stock exchanges. Sadly, BSNL and MTNL are not yet fully equipped with 4G. The Narendra Modi Government has come out with a huge package to revive these two strategic PSU telecom companies. If the plans work out, then only the 5G technology could reach most of the users across the country.
Incidentally, all the private operators only roll out their technology in Metros Cities and urban areas based on commercial viability. Since only BSNL can reach out to the entire country, hence 5G and all technologies must be made available to the public sector telecom firm for the benefit of the entire Indian population.
(The writer is a Special Correspondent of The Pioneer)
