It is believed that the Comptroller and Auditor General has said that the formation of cartels by telecom service providers in the country is the reason behind the failure of spectrum auctions in the country as the firms collectively decided to shun the auctions.

The CAG hinted that the major telecom firms including Airtel, Vodafone, RCom, Idea and Tata Teleservices might be involved in cartelisation in the industry. CAG has reportedly communicated to the Telecom Ministry that leading telecom service providers formed cartel and declined to take part in the auction in 2012-2013. The CAG is now seeking remarks form the ministry in a draft report.

CAG had estimated that the allocation of spectrum to companies in 2008 without auctions resulted in a loss of Rs. 1,76,000 crore in lost revenues. The telecom firms did not respond well to the auction in 2012 for the spectrum that was freed up by the cancellation of 122 telecom licenses by the Supreme Court of India in a landmark judgement. The auction managed to raise only about Rs. 9,407 crore out of Rs. 28,000 crore expected for the government.