The Modi government has completed yet another successful telecom spectrum auction. Through the auction, the government will be getting a whopping INR 1,50,713/- crores. This immediately prompted our opposition leaders and sections of English media to justify Sonia Gandhi’s government action in the 2008 Spectrum allotment. They claimed that the then CAG flagged at a loss of INR 1,76,000/- crores in 2008 for 2G, but even in 2022 and that too for 5G, the actual spectrum auction fetched only INR 1,50,713 crores!
First, let us quickly analyse the spectrum auction over the years. When a spectrum auction is announced, the government invites companies to bid in different frequency bands (units in MegaHertz or GigaHertz). For example, here is a snippet of the notice issued for the latest auction:
We can equate a Frequency Band to a road highway. Companies bid for different lanes on that highway – some buy all lanes; some buy few lanes. You cannot buy the entire highway, nor can you buy one lane for the entire country in one go. India is divided into 22 Telecom circles – companies have to bid for slots allocation in different bands in each one of these circles.
The government will decide what frequency bands to put up for auction. It is not necessary that everything that has been put up for auction is sold, quite naturally. The cost of bidding is very high because the resource available is scarce. With this background, let’s begin analysing the table below. This table has multiple columns, which we will discuss further.
The first big auction happened in the year 2010, after a massive uproar in the country over the illegal 2008 allotments. Two types of spectrum were put up for auction and a whopping INR 1,06,261/- crores were earned by the government of India. Only one band was put up for auction and 7 companies bid for various slots in that band only.
You would have by now seen the very low amounts in the 2012 and 2013 auctions. This was because of a lot of issues between the companies and the then UPA government. You can also see in the table that 3 different bands remained unsold in these auctions. Even with such a poor performance, no one accused the UPA of a scam in these auctions, simply because unsold bands don’t indicate a scam!
The 2014 auction for 2G spectrum only and the government earned good money from that auction – INR 61,162 crores! This auction was necessitated because the spectrum licenses that companies first got in the year 1994 were expiring. So, from auctions during the UPA time, a total of INR 1,80,469 crores was earned by the government of India!
The first auction in the NDA government happened in 2015, and a new frequency band, 2100 MHz, was also put up for auction for the first time. This was yet another successful auction, with GoI earning INR 1,09,874 crores from the auction. For the 2016 auctions, we can also see that the government approved the auction of many more bands. This is very natural because now your existing highways don’t have enough lanes, so you open up new highways and lanes for auction! If all the frequency bands that were put up for auction were sold, the expected revenue was nearly 4.5 lakh crores! The bulk of this revenue was expected just from the 700MHz band (nearly 3.5 to 4 lakh crores!).
You can see in the table that the 700MHz band went unsold both in the 2016 and 2021 auctions – quite obviously because of the very high reserve price for this band. The 2021 auction also saw no bids for a new band, 2500MHz. And you can also see that the GoI was able to earn INR 77,814 crores, making this yet another successful auction!
The recently concluded 5G Spectrum auction was by far the highest amount that the GOI could earn – a whopping 1,50,713 crores! You can also see that some slots in the 700MHz were sold this time (Reliance bought it for nearly 40,000 crores!), but the new 600 MHz found no bidders, yet again because of a high base price. With all the information at our disposal, we can understand the trend too – some bands with high reserve prices will go unsold in the first auctions because companies need to weigh the pros and cons of investing so much in those bands.
Thus far, the auctions under the NDA government fetched a whopping INR 4,04,190/- crores, as opposed to the INR 1,80,469/- crores under UPA. Together, GoI has earned a whopping nearly INR 6,00,000/- crores from the auctions of these spectrums, over the last 12 years.
Now, did you know how much we earned under Sonia Gandhi’s watchful eye in the 2008 2G Spectrum allotment? We earned just close to ~12,000 crores! In the year 2008, Sonia Gandhi’s government allotted 2G spectrum to 9 companies. Each company paid INR 1650 crores, a rate that was decided in 2001! One such company, Unitech, sold 60% of this stake to Telenor for INR 6120 crores. So simple math suggests that if 60% value is 6120 crores, then 100% is 10,200 crores. Yet another simple math suggests that if one company is valuing this at 10,200 crores, then the total expected from 9 companies is 10,200*9 = 91,800 crores!
The CAG report in 2010 took sales of 3 such companies into account; it took into account recommendations of various government bodies; and it took into account the successful 3G auction (shown in our table above). And came up with a range of “presumptive loss” – from a whopping INR 57,666 crores to a whopping INR 1,76,645 crores! For obvious reasons, it is the 1,76,645 crores number that garnered the most attention.
Such was Sonia Gandhi’s hold on the government that the then Telecom minister, A.Raja could ignore advice from the Law and Finance minister and defy orders even from the Prime Minister of India! A total of 122 licenses were allotted to these 9 companies – 85 of them to ineligible companies!
The Supreme Court declared the entire allocation of 122 licenses illegal and cancelled all the licenses! An illegal allotment was done in 2008 and yet sections of English media want us to believe that what Sonia Gandhi’s government did was perfectly alright! We have seen how valuable the spectrum is (6 lakh crores in 8 auctions) and yet the English media wants to argue that the mere ~12,000 crores earned by GoI in 2008 was the right decision at that point in time!
It is indeed true that the CBI was not able to prove a financial scam in the courts, but for us to ignore the illegality of the 2008 allocations as confirmed by the same courts; and for us to ignore the huge earnings through spectrum auctions all these years, only amounts to deceiving the people of the country.
