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3G spectrum auction enters last lap

3G spectrum auction enters last lap
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First Published: Thu, May 06 2010. 11 15 PM IST

Graphic: Ahmed Raza Khan/Mint
Graphic: Ahmed Raza Khan/Mint
Updated: Thu, May 06 2010. 11 15 PM IST
New Delhi: The ongoing auction of spectrum needed by India’s telecom service providers to offer third generation (3G) mobile telephony services has entered the final phase with the auctioneers having raised the so-called activity rule to 100%.
At the end of Day 23 of the auction, 132 rounds of bidding were completed with the last round going on for 2 hours, an official with knowledge of the situation said, speaking on condition of anonymity.
Graphic: Ahmed Raza Khan/Mint
Given the interest by the bidders, the auction could go on for a few more days, this person added.
The pan-India price of one slot of 5 MHz of spectrum being auctioned has reached Rs11,327 crore ($2.5 billion) giving the government an assured income of around Rs45,000 crore. This is far above the estimated Rs35,000 crore and 223% above the base price of Rs3,500 crore.
Mumbai retained its position as the most desirable market with bids for spectrum in India’s financial capital reaching Rs1,986.69 crore followed by New Delhi at Rs1,920.02 crore.
Each bidder is assigned points based on the earnest money deposited prior to the start of the auction. The auction started with an activity rule of 80% which meant each bidder was required to bid up to 80% of the value of the points in that round to be eligible for the next round of the auction.
The activity rule for the auction was raised to 90% on April 30 at the end of 100 rounds of bidding.
“The bids have already reached irrational levels, but in a spectrum scarce environment like that is being faced by the operators now, they need the spectrum,” a Mumbai based brokerage analyst said, speaking on the condition of anonymity. “But the telecom business is such that you can never have enough spectrum.”
Before the auction had begun, analysts were expecting one slot spectrum to cost around $2 billion, taking the government’s total earnings from the auction of spectrum (including BWA) to around $10 billion. The auction for Broadband Wireless Access spectrum (BWA) is expected to start two days after the 3G auction finishes. Winning bidders will have to pay the money they have bid to the government within 10 days of the close of the auction.
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First Published: Thu, May 06 2010. 11 15 PM IST