The Comptroller & Auditor General of India has blamed the high reserve price fixed by the Department of Telecom as the reason for the Government’s failure to sell spectrum through an auction.
The report pointed out that there were huge quantity of spectrum lying idle valued at Rs 85,014 crore. “Fixation of extremely high and artificially determined reserve price in these auctions have acted as deterrent for participation in the auctions,” stated a preliminary report sent by the Director General of Audit (Post & Telegraph) to the Department of Telecom for comments
Interestingly, the Telecom Ministry had earlier blamed the CAG for forcing the Government to fix a higher reserve price for the auction.
The audit report said that as much as 453 MHz of spectrum is available in the 1800 MHz band for last one year. “Substantial MHz of 2G spectrum was going waste due to non-utilisation as a result of inappropriate decision making process of the DoT,” the report said.
It said that the Government’s spectrum policy has allowed hoarding, wastage and manipulation by private telecom companies.
“There was wide variation in the utilisation of the spectrum by the various telecom service providers even in the prime metro service areas, which was primarily die to inefficient utilisation of the availability of spectrum. This has led to lower telecom revenues in the form of lower licence fee and spectrum usage charges to the Government.
The DoT has not taken any action to incentivise the efficient utilisation of spectrum,” the report added.
The report names several operators, including Bharti Airtel, Reliance Communications, Idea Cellular and Aircel.
“It was found that Aircel had insignificant number of subscribers in at least four service areas (Gujarat, Haryana, Himachal Pradesh and Madhya Pradesh) as of December 2012 in comparison to other operators, which were allocated same quantity of spectrum at the same time in these circles. It was, therefore, evident that this company was hoarding the scarce spectrum and causing huge loss to the Government exchequer,” the audit report seen by Business Line said.