India’s biggest spectrum auction ends with bids worth only Rs 65,789 cr

07 Oct 2016 Evaluate

India’s biggest auction of telecom spectrum, closed just after five days and 31 rounds of bidding with bids worth about only Rs 65,789 crore being received for 965 Mhz of spectrum, out of total 2,354.55 Mhz put for auction and against expectation of Rs 5.6 lakh crore. This was about 40 per cent of the total worth of spectrum that was placed on the block, leaving nearly 60 percent of airwaves, including premium 4G bands, unsold. In comparison, the spectrum auction last year had lasted for 19 days and attracted bids worth Rs 1.1 lakh crore.

During the course of the five days there were no takers for the premium 700Mhz and 900 Mhz bands, mainly because of high reserve price set by the government. The 700MHz band alone was expected to fetch Rs 4 lakh crore for the government. Companies winning spectrum in frequency bands above 1Ghz -- 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz -- will have to make 50 percent upfront payment, while the rest can be paid in 10 years after a two-year moratorium, this means that the government would get about Rs 32,000 crore in upfront payment.

On the final day total bids had dipped a bit to about Rs 63,325 crore at the end of the 26th round as compared to the previous closing. Each round on final day was of 45-minute duration, unlike 60 minutes on the previous days. The bidding activity took place only in few circles with interest continuing to be largely around 1800 MHz and 2300 MHz that can be used by operators to provide 4G services. Industry also showed interest in 2100 Mhz (3G/4G) band, 2500 Mhz (4G) band and 800 Mhz (2G/4G) bands.

Seven operators were in the fray includes Reliance Jio, Bharti Airtel, Vodafone, Idea Cellular, Tata Teleservices, Reliance Communications and Aircel. Vodafone emerged as the highest bidder with bids worth over Rs 20,000 crore, followed by Airtel at Rs 14,244 crore. Newcomer Reliance Jio won airwaves across key 4G bands for Rs 13,672 crore. Idea procured 349.2 MHz of spectrum for Rs 12,798 crore securing additional airwaves in 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.

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