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SBI Caps has expressed interest in bidding for the auctioneer’s job in the upcoming spectrum sale.
The investment banking arm of State Bank of India has sent feelers to the Department of Telecom to check if they would be eligible for the job.
However, DoT is looking into whether allowing SBI Caps to act as the auctioneer would lead to a conflict of interest given that its parent company has lent money to telecom companies which may bid for the spectrum.
Request for proposal
Also, SBI Caps itself provides fund-raising services and consultancy to some of the telecom companies.
According to the request for proposal (RFP) issued by DoT, the auctioneer or any of its associates should not engage in any activity that is in direct conflict with the contracted job. But it does not specify what kind of activities would be considered as conflict of interest.
An inter-ministerial committee, which is overseeing the auction process, has proposed to seek legal view on SBI Caps’ candidature before allowing it to bid.
Concerns have also been raised about whether SBI Caps would need to get permission from SBI to take up the job. The RFP for auctioneers states that the bidding firm and all its substantial equity holders would be held responsible for conducting the auctions. SBI Caps has told the DoT that its parent firm may not sign up as far as taking responsibility for the auction is concerned.
“Being a 100 per cent subsidiary of SBI, it would not be feasible for us to get this permission from SBI,” SBI Caps said in a query sent to DoT without explaining the reason.
The inter-ministerial committee has asked DoT to clarify as to what extent the equity holders of the bidding company would be make responsible.
If selected, SBI Caps will get a minimum of Rs 5 crore as the auctioneer fee.
In addition, it would get a small percentage of the difference between the reserve price and the final bid amount.
During the 2010 auction for 3G and broadband spectrum, the auctioneer, N M Rothschild, ended up collecting a fee of Rs 30 crore.
TCIL also interested
Another PSU, Telecommunications Consultants of India Ltd (TCIL) has also expressed interest in acting as the solutions provider for the auction. It has proposed a system whereby it will supply the platform for the online auction and DoT can become auctioneer.
TCIL has told DoT that it would be important from a security point of view to separate the functions of the auctioneer and the supplier of the software platform for conducting the auction.
> thomas.thomas@thehindu.co.in
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