BackTelecom spectrum auction gets Rs60,000 crore bids on first day
Bidding will resume on Thursday morning in auction through which govt was expecting to raise over Rs82,000 crore
Premium(Priyanka Parashar/Mint)
New Delhi: India’s biggest auction of wireless radio waves started on Wednesday with phone companies making bids worth an estimated ₹ 60,000 crore in all four spectrum bands that are on the block.
“Bids are coming, and there is considerable action," said Kausik Ray, who is handling the online auction at Mjunction Services Ltd. He declined to give details about which carriers had submitted bids, with the sales subject to court review.
There was significant demand for spectrum in the 800 megahertz (MHz) and 900MHz spectrum bands in Delhi, Mumbai and Kolkata, a department of telecommunications (DoT) official said. Demand for air waves in the 2100MHz band is muted, said the official, who declined to be named. The trend may change over the next few days, he said.
The bids had reached around ₹ 60,000 crore on the opening day of the auction, a second official said, also requesting anonymity. Mint could not independently verify this figure.
“The Indian telecoms auction starting today is likely to see intense bidding by telcos to retain their existing spectrum and to acquire new spectrum as supply is limited," Fitch Ratings said in a report on Wednesday.
The spectrum auction, the fifth since 2010, is offering air waves needed for mobile communications services in the 800MHz, 900MHz, 1,800MHz and 2,100MHz bands.
The eight telcos in the fray include Mukesh Ambani-controlled Reliance Jio Infocomm Ltd and India’s largest telco Bharti Airtel Ltd.
Others include Vodafone India Ltd, Idea Cellular Ltd, Reliance Communications Ltd, Telewings Communications Services Pvt. Ltd (Uninor), Aircel Ltd and Tata Teleservices Ltd.
Earlier this month, the cabinet approved a base price of ₹ 3,646 crore per MHz for the 800MHz spectrum band, ₹ 3,980 crore per MHz for 900MHz band airwaves, ₹ 2,191 crore for the 1,800MHz band and ₹ 3,705 crore for 2,100MHz band spectrum needed for 3G services.
The government is likely to get about a quarter of the successful bid amounts in this fiscal year itself as the winning bidders will have the option of paying 25-33% up front, depending on the band.
The balance can be paid by the operators after a two-year moratorium in 10 annual instalments.
“The auctions are likely to reset competition scenario in the country. Considering large stakes are involved for the government and telcos, we should not be surprised if the auctions go on for over 100 days," said Hemant Joshi, a partner at Deloitte Haskins and Sells, an audit and consultancy firm.
“With the very low ARPUs (average revenue per user) and proliferation of net neutrality, telcos’ profitability and cash flow will be negatively impacted on account of the auctions and will further leverage the strained balance sheet," Joshi said. “And this will reduce the availability of funds for buying new technologies and could delay or adversely impact the benefit expected from the Digital India programme."
The auction may fetch the government over ₹ 82,000 crore at the base price. The eight bidders for air waves have lodged bank guarantees of ₹ 20,400 crore for the auction.
The government won’t release information about individual companies or say who has won spectrum until the auction has ended. It may release total bidding amounts at the end of each day.
India’s spectrum sales have been affected by scandal in the past, and the country changed the rules in 2012 to redistribute air waves every time they expire. The Supreme Court cancelled 122 permits sold in 2008 after ruling they were granted illegally.
Bloomberg and PTI contributed to this story.
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