New Delhi: The auctioneers carrying out the sale of third-generation (3G) mobile spectrum have raised the eligibility criteria, or activity rule, for bidders to 90% on the 18th day of bids.
The department of telecommunications (DoT) had notified that the auction activity requirement would be raised to 90% from the current level of 80% in its report on the auction at the end of the 100th round of bidding.
Photo: Priyanka Parashar / Mint; Graphics: Yogesh Kumar / Mint
Each bidder was assigned points based on the earnest money deposited prior to the start of the auction, for each of the 22 telecom circles they had applied for. Till now, each bidder was required to bid up to 80% of the value of the points in each round to be eligible for the next round of auction.
The activity rule or eligibility criteria refers to the system put in place by the designers of the auction to ensure that the bidders remain active if they are interested in getting the spectrum in a particular circle.
“The bidder will not be able to sit quiet and then suddenly jump into the auction,” said a senior DoT official, confirming the development.
At the end of 18 days of the auction, 104 rounds were completed with the price of one slot of 5Mhz of 3G spectrum reaching Rs9,521 crore ($2.15 billion), or 172% above the base price of Rs3,500 crore.
This assures the government an income of at least Rs38,452 crore, well above its estimate of Rs35,000 crore for both 3G and broadband wireless access (BWA) spectrum combined. Mumbai remained at the top of the bids at Rs1,506.41 crore followed by Delhi at Rs1,459.96 crore.
The auction will come to an end once the demand for the spectrum equals or is less than the supply.
“The bids have already reached irrational levels and it will be very difficult for the telcos to monetise this spectrum in the short term,” a Mumbai-based analyst with an multinational brokerage firm said on condition of anonymity as he is not authorized to speak to the media. “They are going to use the spectrum for vanilla voice services due to the shortage of 2G spectrum and only after the congestion stabilizes will the operators be able to truly monetise the 3G spectrum.”
A total of nine private firms entered the auction, including the country’s largest telecom service providers, Bharti Airtel Ltd, Reliance Communications Ltd and Vodafone Essar Ltd. Of these nine, five are said to be still bidding but this could not be independently verified by Mint.
On Thursday, minister of communications and information technology, A. Raja had said in Parliament that the auction which started on 9 April would be finished in a day or two.
“The auction is being held successfully...it will be completed in one or two days,” Raja said, adding that the auction is now expected to earn upwards of Rs50,000 crore for the government.
Three slots of 3G spectrum are up for sale from the auction in most of the 22 circles or operating areas across the country with five circles having four slots for sale.
One slot has already been given to state-run Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd who will have to match the price of the spectrum at the end of the auction. The state-owned telecom operators have asked the government for some exemptions in this payment which the government is still to decide on.