New Delhi: The second day of the spectrum auction saw little action compared with the first, and the government could fall well short of the Rs5.6 trillion it originally expected to raise by selling 2,354MHz of radio waves.
Monday saw six rounds of bidding, with telcos including Bharti Airtel Ltd, Vodafone India Ltd, Idea Cellular Ltd and Reliance Jio Infocomm Ltd bidding for just Rs3,261 crore worth of spectrum, taking the overall tally to Rs56,792 crore, according to a person familiar with the matter who asked not to be identified.
The five rounds of bidding on Saturday, the first day of the auction, saw telcos bid for as much as Rs53,531 crore worth of spectrum.
Unless things pick up in later rounds, the government may also find it difficult to meet the targeted Rs98,995 crore from communication services for the year to March. The amount includes proceeds from spectrum auction and other fees levied by the telecom department. Only a fraction of the amount raised through the auctions will flow into the government’s coffers this year.
The flagging of intensity in the auction on Monday was expected after telcos aggressively plugged gaps in their network through active participation on Saturday, in all the bands except for the 700MHz and 900MHz ones.
On Monday, Mint reported that the auction may end as early as this week because of a high reserve price for the airwaves, especially in 700MHz, and muted response from telcos.
In 2010, a similar auction went on for more than a month and a 2015 edition lasted 19 days and 115 rounds.
“Last time (2015), auction was a survival auction; this time, there is no fighting to survive; so, obviously, there is a difference,” said the person cited above. His reference is to the fact that the licences of several telcos were expiring in 2015 and had to be renewed, and the spectrum bid for afresh.
That auction was for only 380.75MHz spectrum in four bands and fetched the government Rs1.1 trillion.
In 2010, the government raised Rs1.06 trillion from the auction.
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Vishal Tripathi, research director at Gartner Inc., said despite 700MHz being the most efficient band for data across the world, no company showed interest in it to safeguard financial interests. “Telcos have bid for what was needed without going overboard, keeping their business model and RoI (return on investments) in mind as companies cannot raise voice or data tariffs due to competition from Reliance Jio.”
Still, the $8.1 billion worth of bids on Saturday was 21% higher than Goldman Sachs’ estimate of $6.7 billion.
The assured amount of $8.4 billion with an immediate upfront payment of $4 billion means that the value of spectrum sold in the current auction is in line with previous spectrum auctions held in India, Credit Suisse said.
In a 2 October report, Morgan Stanley said “(the) 1800MHz saw the highest activity, with two to three bidders present across most of the circles.”