Spectrum auction: govt gets bids totalling `50,000 crore
Stiff competition continued to mark the 900MHz band bids, with excess demand in Delhi
New Delhi: Companies bid at a slow and steady pace on the third day of the government’s spectrum auction on Wednesday, netting the exchequer around ₹ 50,000 crore in 21 rounds of bidding for 1800 megahertz (MHz) and 900 MHz bands since Monday.
Stiff competition continued to mark the 900MHz band bids, with excess demand in Delhi. There were 21 bids for 16 available blocks in Delhi and the price per MHz for airwaves in the national capital shot up 60% to ₹ 574.08 crore over the reserve price.
The price per MHz of 900MHz spectrum in Mumbai reached ₹ 563.09, up 71% over the reserve price. In Kolkata, it went up 54% over the reserve price to ₹ 192.71 crore. Both Mumbai and Kolkata showed lower demand than available blocks at the end of the 21st round on Wednesday.
The 1800MHz spectrum auction saw excess demand in Assam, West Bengal and Bihar, and consequent price increases for Thursday’s round.
However, at the end of the 21 rounds, the prices per block of 1800MHz spectrum—for Delhi, Gujarat, Jammu and Kashmir, Maharashtra, and Western Uttar Pradesh—have increased significantly from the reserve price, showing excess demand in the earlier rounds.
“The slow and steady pace of the auction along with the highly volatile demand numbers for the quantum of slots shows that the auction is far from over," said a Mumbai-based telecom analyst with a multinational brokerage firm, who did not want to be named.
The larger companies involved in the bidding, including Bharti Airtel Ltd, Vodafone India Ltd and Idea Cellular Ltd, continued to fight hard for the lucrative 900MHz spectrum on Wednesday.
“The auction is a very complex game that the operators are playing. Each operator is bidding, based on what spectrum they need and where they need it. There’s no way to know what is happening, but we can see it is very competitive and each company has its own strategy that has to play out," said Hemant Joshi, partner, Deloitte Haskins and Sells.
Shares of Bharti Airtel fell 0.63% to ₹ 314.45 each, while Idea Cellular’s stock fell 4.6% to ₹ 144.20 after climbing almost 8% on Tuesday. Anil Ambani-controlled Reliance Communications Ltd’s shares rose 0.89% to ₹ 125.35 each. The benchmark Sensex gained 0.24% to 20,261.03 points.
On Tuesday, the government received bids valuing the spectrum at around ₹ 45,000 crore, with the price of 900MHz spectrum rising by as much as 68% in Mumbai, and 47% in Delhi and Kolkata.
“The industry is future- proofing itself. Many of the operators will see their licences expire in the next few months or few years and the auction gives them a chance to ensure that they continue to remain in the business. There is a relative shortage of spectrum in the country, which means it will likely be more expensive in the next auction," Joshi said.
This is the third time the government is auctioning 2G spectrum in the last 15 months, after auctions in November 2012 and March 2013. The earlier two are, however, considered failures as only a third of the spectrum was sold.
Money from the auction is expected to go towards keeping the fiscal deficit at under 5%, a key goal of the government. The government netted around ₹ 41,000 crore from the first day’s auction on Monday and another ₹ 5,000 crore on the each of the subsequent two days.
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