Back2G spectrum auction sees renewed interest
The price of the 900 MHz spectrum in Delhi and Kolkata rose 47% each above the reserve price to `541.34 cr and `192.71 cr, while the price per MHz of 900 MHz in Mumbai rose 68%
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New Delhi: The government’s third spectrum auction in 15 months continued to generate interest from telecom operators with the price of the airwaves in the lucrative 900 megahertz (MHz) band rising by as much as 68% in Mumbai on the second day of the auction, indicating fierce competition for the bandwidth slots.
The second day of the auction on Tuesday also saw renewed interest in the 1,800 MHz spectrum band in Western Uttar Pradesh and Assam apart from continuing demand for such slots in Gujarat, according to data from the telecom department, which is organizing the auction. Fourteen rounds were completed at the end of the second day of the spectrum auction with the government receiving cumulative bids totalling ₹ 40,800 crore, almost ₹ 1,000 crore lower than Monday’s number, even as operators bid for bandwidth slots in Western Uttar Pradesh, where demand jumped by more than three times.
This shows that the bidders are keeping the auction open till the 900 MHz auction is concluded. The reason for the lower cumulative amount is that the operators did not bid for as many blocks of the spectrum as they did at the end of Monday, but are expected to pick them up before the auction ends, according to a senior telecom department official, who declined to be named.
The government had lowered the minimum price of spectrum for the current auction after two previous attempts to auction the airwaves failed to generate adequate interest from telecom operators. In addition, it is crucial for Bharti Airtel Ltd and Vodafone India Ltd, which hold a bulk of the airwaves on the 900 MHz band, to win spectrum in the same bandwidth in the current auction as their permits are set to expire in November. A failure to win spectrum in the 900 MHz may make it difficult for Bharti Airtel and Vodafone India, the nation’s two largest mobile phone service provider, to operate services in India’s biggest cities.
The price of the 900 MHz spectrum in Delhi and Kolkata rose 47% each above the reserve price to ₹ 541.34 crore and ₹ 192.71 crore, while the price per MHz of 900 MHz spectrum in Mumbai rose 68% to ₹ 552 crore, according to Mint calculations.
“Broadly speaking, everything seems to have gone up. We are seeing more demand in some specific circles in the 1,800 MHz auction while 900 MHz spectrum demand is still very high," said Nitin Padmanabhan, an analyst at Mumbai-based Espirito Santo Securities India Pvt. Ltd. “When the other operators like Idea see their 900 MHz spectrum come up for auction next year, there is likely to be similar demand, at least for that spectrum."
The slow bidding by the operators is being viewed by analysts as part of a strategy of the participating operators to bid as if running a marathon, slow and steady, said a Mumbai-based telecom analyst with a multinational brokerage firm, requesting anonymity.
A senior DoT official said that he expects government revenue will increase by around ₹ 4,000-5,000 crore above Monday’s closing figure, as blocks that have already been bid for in earlier rounds will still be sold.
Still, shares of telecom companies gained on Tuesday after newspaper reports on the first day of auction allayed investors’ fear that the companies were bidding too aggressively for the airwaves.
The government received more than ₹ 40,000 crore worth of bids on the opening day of the spectrum auction from seven rounds of bidding, Mint had reported on Monday.
Shares of Bharti Airtel Ltd, India’s biggest mobile phone services provider, rose 3.43% to ₹ 316.45 at the end of trading on BSE on Tuesday. Reliance Communications Ltd’s shares gained 2.9% to ₹ 124.25, while the shares of Idea Cellular Ltd advanced 7.7% to ₹ 151.15. The benchmark Sensex gained 0.01% to 20,211.93 points.
Idea shares were also boosted by the telecom department ruling to allow the merger of erstwhile Spice Telecoms’ Karnataka and Punjab licences with the Aditya Birla Group company. This will enable Idea to offer 3G services in Punjab.
All eight participating mobile operators, including Bharti Airtel, Vodafone India Ltd, Idea Cellular, Tata Teleservices Ltd, Aircel Ltd, Reliance Communications, Telewings Communications services Ltd and Mukesh Ambani-promoted Reliance Jio Infocomm Ltd are bidding, DoT officials said.
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