2G spectrum auction begins amid strong bidding for all circles

With eight companies in the fray for GSM and CDMA spectrum, bidding in the 2G spectrum auction got under way today this morning with bids coming in for all 22 circles in the 1,800 MHz band and all three zones in 900 MHz band.

In contrast to the auction in March last year which was a damp affair, this time the bids have poured in from eight telecom companies, including market leaders Bharti Airtel, Vodafone India, and Reliance Jio Infocomm, after the government reduced the base, or minimum bid, price to more realistic levels. The government expects to garner at least Rs11,300 crore from this round of auctions.

"Till now, bids have been received in all 22 service areas in 1800 MHz band and in all three service areas in 900 MHz band. Thus, bidding has taken place in all the service areas in both bands," an official statement said.

The auction started as planned after the Supreme Court on Saturday refused to interfere with the order of the telecom tribunal TDSAT dismissing the pleas of Bharti Airtel, Vodafone, Loop Telecom and Idea Telecom for a stay on the spectrum auction and extension of their licenses by another 10 years.

The department of telecommunications (DoT) has put on the block about 385 MHz of radio waves in the 1800 MHz band and 46 MHz in the 900 MHz band.

Normally, six to seven rounds of bidding take place in a day with each round of 60 minutes. There is a 20-minute break between rounds. Four rounds of bidding had been completed at the time of writing today.

The government is conducting this third round of spectrum auction following a Supreme Court order in the 2G case directing that all radio waves freed from the cancellation of 122 licences in February 2012 should be auctioned.

Besides, the 900 Mhz has to be auctioned as some of the spectrum in this band is held under old telecom licences, which will start expiring from November 2014.

The 3G auction in 2010 lasted for 34 days, while the offer in November 2012 lasted for two days and the one in March last year lasted for just one day. In November 2012, Rs9,407 crore of bids were received for spectrum worth Rs28,000 that was offered. In March 2013, no GSM operators bid at the auction and only CDMA operator Sistema Shyam bought spectrum of about Rs3,600 crore in eight of the 21 service areas.

Vodafone needs to get spectrum in Delhi, Mumbai and Kolkata; Airtel in Delhi and Mumbai, and Loop Mobile in Mumbai to continue operations as their licences expire in November.

The government is hopeful that the entire spectrum offered will be sold in the auction. It has set a target of Rs40,874.50 crore for this fiscal ending in March from radio spectrum, including the auction amount, one-time spectrum charge and annual regular licence fee.