Bumper bids in 2G spectrum auction paving way for higher phone bills
The government is enjoying mobile phone operators' aggressive bidding for 2G spectrum in the ongoing auctions, but analysts are of the view that bumper bids are paving a way for higher phone bills.
On the very first day of 2G spectrum auction, on Monday, the government received bids of around Rs 41,918 crore, much higher than the initial estimated amount of Rs 11,300 crore. Higher-than-expected bids brought a big respite for the government, which has been struggling to generate money to close its massive fiscal deficit.
A senior executive of a mobile phone operator said operators as well as investors would panic in case bids soar to Rs 45,000 crore to Rs 50,000 crore.
Rajan Mathews, director general of Cellular Operators Association of India (COAI), cautioned that the impact of aggressive bidding would later be passed on to consumers.
Commenting on the topic, Mathews said, "At the end of bidding, we will have to evaluate the impact on tariffs the final bid amount will have. Some of it will be passed on to the consumer."
The government is auctioning 2G spectrum in 900 MHz and 1,800 MHz bands for 22 telecom circles across the country. Telecom circles of Delhi and Mumbai are witnessing aggressive competition among operators. India's biggest mobile phone operator Bharti Airtel doesn't own spectrum in the 900 MHz band in Mumbai, while Vodafone is vying to acquire additional spectrum in Delhi, Mumbai and Kolkata circles.
The surprise entry of Reliance Industries Ltd (RIL) into the spectrum auction made the bidding even more aggressive. Telenor, Idea Cellular, and Tata Teleservices Ltd are some of the other telecom operators participating in the spectrum auction fray.