Sistema Shyam: The Only Bidder For Round 2 Auction

After the failure of the first round of telecom auction (GSM), the second round of auction for 2G CDMA airwaves also showed a negative response from bidders today. Sistema Shyam Teleservices is the only bidder in this auction. The company has bid for eight circles in the country including Delhi, Gujarat, Karnataka, Kerala, Kolkata, Tamil Nadu, Uttar Pradesh (West) and West Bengal. As per the information deposited by DoT, the telecom operator has deposited Rs 613.75 crore to bid in this auction. The government was expected to raise an approximate amount of Rs 3,639 crore through this CDMA auction.

The first round, held in November 2012, has fetched just Rs 9,407 crore for the government against an expected amount of Rs 40,000 crore. Due to the higher base price of airwaves, many telecom operators have not participated in this round of auction, leading to its failure.

While in January 2013, the Government of India had cut the CDMA price by 50% to draw more bidders for the March auction. However, many operators still find it costly and haven’t participated in the current spectrum auction. Also, in this auction, there are no bidders for Mumbai, Uttar Pradesh (East) and Maharashtra circles.

In the month of February 2013, the telecom operator Sistema Shyam had announced the discontinuation of its operations in 10 circles from 23 March 2013. These were Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu & Kashmir, Madhya Pradesh, North-East, Orissa and Punjab. However, the newly auctioned circles are different from these circles.

After the first round of auction failed, the second round also disappointed the government and it will definitely create an extra burden on the exchequer’s financials, thus impacting the fiscal deficit.