What was supposed to be the biggest Spectrum auction has turned out to be the most insignificant event in Telecom sector. No one wants to talk about it. Whatever one reads in Newspapers is only negative publicity. Various experts have already declared it a failure.

TelecomTiger talked to telecom guru B K Syngal to understand whether the auction has failed and if yes, who is responsible for it.

Q: Newspaper reports are indicating that Spectrum auction has failed. What is your view on it?

A: Spectrum auction can be considered equivalent to the public issue (listing of a Share) as both processes involve market price determination. During a public issue, if an organization issues a statement that can have impact on share price it would tantamount to insider trading. Very recently, a company was penalized by SEBI for releasing price sensitive information.

In certain stock exchanges, the silent period starts two weeks before the actual launch of public issue and is enforced during the entire period of the issue. There are set rules for this all over the world.

In formulating guidelines for the Spectrum auction, the government should have followed the practices of Stock exchanges.

Q: What precautions the government should have taken to make it successful?

A: In this case, auction is being conducted to find out a market driven price of a scarce national resource. This is equivalent to bidding for securities (shares). If it is not done properly, the price could be affected or the whole exercise may become a failure.

In the case of Spectrum, the department of telecommunications (DoT) should have set a process by which all the stake holders should have been barred from making any statement that could have affected the price of spectrum. The silent period could have started two weeks prior to the auction. The curfew of auction should have remained until the auction was complete.

Q: What is its impact now?

A: By not doing so, the DoT has put itself in big risk of failure of the auction. The statements by the self anointed experts claiming that the Spectrum prices are high; there will not be any takers for the spectrum; comparing India with countries that are 1/100th of its size and saying that the prices are high; has done great harm to the country. In fact, they have created a scenario where the prices have hammered down.

I also wonder who are these unnamed DoT officials leaking sensitive information to press on auction saying that there are no takers for 700 MHz band spectrum or who has bid for which spectrum band. Only DoT is privy to this information.

I don’t understand how this information can be published in public platforms. It means that some officials are sabotaging the auction. Is someone doing it deliberately to bring down the prices fo Spectrum? It clearly shows that there are vested interests that want to sabotage the Spectrum auction.

In my opinion, an EMI of Rs 6000 crore per month for a 20 year of spectrum should not be a big deal for this industry. Telecom is a Rs 350000 crore industry and is growing in double digits with the explosion in data. Shame on those who want to sabotage the auction.