Vodafone, Airtel win spectrum; Govt gets Rs 61,162 crore

Updated on : 24-02-2014 08:07 AM

Vodafone Group and Bharti Airtel won critical wireless telecom spectrum in metros like Delhi and Mumbai and several other cities in an intensely fought 10- day auction that gave the government over Rs 61,162 crore, far exceeding its own target.

Mukesh Ambani's Reliance Jio Infocomm, which surprised by entering the fray despite owing pan-India 4G spectrum, bid aggressively for both the bands of airwaves on offer - the premium 900 Mega-Hertz and not so efficient 1,800 MHz, but choose spectrum only in the later band in 14 out of 22 circles. Vodafone, whose license in Delhi, Mumbai and Kolkata is due to expire in November this year and desperately needed spectrum in the auction to continue operations, put in bids worth Rs 19,600 crore to win 900 MHz airwave in the three metros and 2G 1800 MHz spectrum in 11 circles or zones. Airtel, whose licenses in Delhi and Kolkatta was due to expire in November, won back 900 MHz in both these metros and added the same in Mumbai. It also won 1,800 MHz spectrum in 15 circles. It put in total bid worth Rs 18,530 crore for a total of 115 MHz of spectrum in 900 MHz and 1800 MHz bands.  Sunil Bharti Mittal-promoted firm said it will roll out pan-India 4G network using 1800 MHz.  Idea was the only other company to win the 900 MHz spectrum, which is capable of 3G communications, in Delhi.  In all the auction, which lasted 10 days, fetched the government Rs 61,162 crore, of which Rs 18,296.36 crore will flow to the exchequer within this fiscal. The government was initially expecting only Rs 11,300 crore of revenues to come from the spectrum auction in the current year.  Uninor won spectrum in five circles in 1800 MHz band while Idea got 11 circles in the same band. Anil Ambani's Reliance Communications won just one circle of 1800 MHz in Mumbai. Tata Communications drew blank. Aircel got 5 circles.  "I am very happy to report that auction is over. The total revenue that will come to government is Rs 61,162.22 crore. To that extent particular auction has been extremely successful," Telecom Minister Kapil Sibal said.  For mutual funds, Sebi has asked them to make greater disclosure about group investments and voting rights. The regulator has also sought to weed out non-serious players by increasing the minimum networth requirement for mutual funds from Rs 10 crore to Rs 50 crore, while they have been asked to contribute their own funds in form of 'seed capital' amounting of 1 per cent of amount raised from investors for their schemes. Sebi also asked the government to allow Employees Provident Fund Organisation (EPFO) to invest up to 15 per cent of their corpus in equities and mutual funds. Besides, the regulator wants that all Central Public Sector Enterprises (CPSEs) be permitted to invest their surplus funds in mutual fund schemes.  Sinha said that Sebi wants the government to provide similar tax treatment to all long-term investment instruments, including pension, insurance or long term mutual fund schemes. Noting that mutual funds do not have a stable or clear cut place in the scheme of investment options, Sinha said that is one of the reasons "why retail investors are not very sure whether they should invest in mutual funds or not."  Through the first-ever long term policy for mutual funds, Sebi expects to help channelise household savings into these investment products. The proposed tax benefits include creation of a long-term investment product, Mutual Fund Linked Retirement Plan, with tax incentive of Rs 50,000 under the existing IT Act. Alternatively, Sebi wants the government to enhance the limit under Section 80-C of the Income Tax Act from Rs one lakh to Rs two lakh to help make various mutual fund schemes eligible for such tax benefits.  Currently, this section allows for deduction of Rs one lakh from taxable income of a person. There are about 45 fund houses present in the country with total assets worth over Rs nine lakh crore, but fund mobilisation has been tough in the past couple of years.  To reach the goal of financial inclusion, Sebi said, it will also work towards basics of capital markets and financial planning being introduced as core curriculum in schools and colleges, in addition to investor awareness campaigns through print and electronic media in all languages.