Govt garners Rs60,000 cr on day one of spectrum auction

A total of six rounds of bidding took place on the opening day of the auctions of radio spectrum to telecom operators, with offers amounting to Rs60,000 crore on Wednesday.

Reports said the government received bids in all bands. There was some good bidding in the 800 MHz and 1,800 MHz bands, whereas 2,100 MHz is yet see much traction.

Auctions will continue today. The bid amount is already 50 per cent more than what the government had budgeted.

The total spectrum put to auction is 103.75 MHz in the 800 MHz band, 177.8 MHz in the 900 MHz band and 99.2 MHz in 1,800 MHz band for second generation (2G) telephony. The government has also put up 5 MHz in the 2,100 MHz band third generation (3G) band.

The eight telecom service providers participating in the auctions are Reliance Communications, Reliance Jio, Bharti Airtel, Vodafone India, Tata Teleservices, Uninor, Idea Cellular and Aircel. They have together submitted earnest money of Rs20,435 crore, which is two-and-a-half times what was expected.

The Department of Telecommunications (DoT) has selected Kolkata-based mjunction services - an information technology and internet company promoted 14 years ago as a 50:50 venture by Steel Authority of India Ltd and TATA Steel - for conducting the spectrum auction.

The auction is taking place from 9 am to 7.30 pm Monday to Saturday. The matter of auction was under litigation even before it started. But the Supreme Court has permitted the government to go ahead with the process, but await its directions before finalisation of the bids (See: SC caveat on spectrum auction may affect bidders).

The reserve price approved is Rs3,646 crore pan-India per MhZ in 800 MHz, Rs3,980 crore for 900 MHz band pan-India, and Rs2,191 crore pan-India in 1,800 MHz band. The government also approved a reserve price of Rs3,705 crore per megahertz for 3G spectrum.

As per estimates, at the base price alone, the auction will translate into some Rs82,000 crore, even as the actual process is estimated to fetch around Rs100,000 crore. In December 2015, seven licences each of Idea Cellular and Reliance Communications, four licences of Bharti Airtel and six licences of Vodafone will complete their 20-year term after which they have to be renewed.

In total, there are 29 licences in 18 service areas which expire in 2015-16. The bidding process is using fixed internet protocols for the e-auction as dynamic IP addresses are not allowed.

The objectives is to obtain a market-determined price of spectrum in the bands through a transparent process, ensure efficient use of spectrum and avoid hoarding, stimulate competition in the sector, promote rollout of the respective services and maximise revenue proceeds from the auctions within the set parameters, officials said.

Telecom operators are however furious that the government is holding back available spectrum instead of putting it all up for bidding, and several of them have gone to court on the issue (COAI slams govt for selling spectrum in dribs and drabs ).

The 2010 auctions took 34 days and 183 rounds of bidding. The one in 2012 lasted two days while a year later, it took just over four hours, but these were smaller ones. In 2014, it took place over 10 days with 68 rounds. After 10 days of aggressive bidding by telecom service providers, the government had garnered an Rs61,162.22 crore from the auction of 900-MHz and 1,800-MHz spectrum in last year's auction.