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India's failed spectrum auction could inflict more pain

The botched mobile spectrum auction has forced the government to almost halve its revenue projections from the fees to US$3 billion.
Written by Mahesh Sharma, Correspondent on

India has cut its revenue expectations following its botched mobile spectrum auction by nearly half to US$3 billion, and industry watchers believe it could get even worse.

In the current financial year, which ends March 2013, the government budgeted for the 1800 MHz spectrum auction to deliver over US$7 billion, excluding license fees.
However, this figure was revised in this week's Budget documents--just days after next month's spectrum auction, already attracted only a single bidder
Budget documents reveal that revenue from "Other Communication Services" pertain to the one-time auction of the 2G, 1800 MHz and 900 MHz wave band. It also includes license fees from the 800 MHz range, which generated over US$3 billion revenue in FY2012.
In FY2014 the government expects to receive about US$3 billion--half the amount it originally expected. The projections are based on recommendations of the Telecom Regulatory Authority of India (TRAI).

The troubled auction process began last February, when the government revoked all 122 2G licenses because the Supreme Court ruled they were incorrectly issued back in 2008 due to corruption.
PwC India's telecom lead Mohammad Chowdhury told news site TelecomTiger, there could be more pain on the way.
"We are unclear as to how much could be raised from auctions of fresh blocks of spectrum, so in our view around [US$1.5 billion] of the Government's revenue objectives may be at risk," said Chowdhury in the report Friday.

Ashok Sud, secretary general of the Association of Unified Telecom Service Providers of India, felt the figures were ambitious.

“The 800 MHz auctions will yield INR 50 billion (US$910.7 million) or so, and after adjusting the price of cancelled licenses and the amortisation facility, the actual inflows will be well below that," he said in the article.

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