India’s 2G auction of spectrum has turned out to be a bit of a dud: just two days, as compared with 34 days that the 3G spectrum auction took, and it ended raising just Rs 9407 crore, with only five participants, of which only two were among those whose licenses had been canceled. The lowdown:

– 102 blocks (of 1.25 MHz of spectrum each) were sold for Rs 9407.64 crores.
– Spectrum in 18 circles was won by five telecom operators, although Bharti Airtel only got one, in Assam. – No spectrum was bought for Delhi, Mumbai, Rajasthan, Karnataka circles
– Maximum blocks bought: Bihar (11), UP West (10), UP East (9),Gujarat (8), Assam and West Bengal (7 each)
– Most expensive circles: Tamil Nadu (Rs 306.09), Andhra Pradesh (Rs 286.91), Maharashtra (Rs 262.81), Gujarat (Rs 224.84)
– Telenor has paid the highest per MHz for spectrum: 1.8 times the next highest average price (Videocon).
– New telcos are paying Rs 104 crore per MHz of spectrum, as compared to incumbents, who have paid Rs 46.93 crore per MHz, on average.


– New telcos (Telenor and Videocon) are forking out Rs 6239.72 crore, around 66.32% of the total price of these auctions. Incumbent operators (Airtel, Vodafone, Idea) are only paying Rs 3167.92 crore.
– Maximum money raised: Gujarat (Rs 1798.72 crore), Maharashtra (Rs 1314.05), Tamil Nadu (Rs 1224.36), Andhra Pradesh (Rs 1147.64), UP West (Rs 1074.1)
– Circles in which spectrum was bought: Vodafone (14), Idea (8), Telenor & Videocon (6 each)
– Blocks won: Idea (30), Videocon & Telenor (24), Vodafone (23), Airtel (1)
– Only 42.37% of the total spectrum that was put up for the 2G auction was bought, reports The Economic Times

Operatorwise Results

– Telenor: has bought 24 blocks of spectrum in 6 circles: 24 blocks of spectrum in total. Andhra Pradesh, Bihar, Gujarat, Maharashtra, UP East and UP West. It’s paying a total of Rs 4018.28 crore for spectrum, Rs 133.93 per MHz of spectrum). This is, by far, the highest price per MHz a telco has paid in these auctions.

– Airtel: has bought 1 block of spectrum for Rs 8.67 crore in Assam. It’s paying Rs 6.93 crore per MHz of spectrum)

– Idea Cellular: has bought 30 blocks of spectrum for Rs 2031.31 crore, in 8 circles: Assam, Bihar, Jammu & Kashmir, Kerala, Madhya Pradesh, Maharashtra, North East, Orissa, Tamil Nadu and West Bengal. In West Bengal, it picked up 5 blocks, the highest in any state. Idea is paying around Rs 54.17 crore per MHz, and has picked up the maximum number of blocks (30) in these auctions.

– Vodafone: has picked up 23 blocks of spectrum in 14 circles (the highest spread), for Rs 1127.94 crore. It has bought spectrum in Assam, Bihar, Haryana, Himachal Pradesh, Jammu & Kashmir, Kerala, Madhya Pradesh, Maharashtra, North East, Orissa, Punjab, UP East, UP West and West Bengal. It’s paying, on an average, Rs 39.23 crore per MHz of spectrum.

– Videocon has picked up 24 blocks of spectrum in 6 circles (4 blocks of 1.25 MHz each in each circle), for Rs 2221.44 crore. It’s preferred circles of operation: Bihar, Gujarat, Haryana, Madhya Pradesh, UP East and UP West.

What Next?

The signs that this would be a dud auction were there: Tata Tele, Reliance Communications and MTS did not participate, and most new telcos (who got spectrum during the infamous 2008 “allocation”) and incumbents chose not to participate. The Cellular Operators Association of India (COAI) blamed the high reserve price to be the primary reason for the dismal response to the 2G auctions, reports The Hindu. Telecom minister Kapil Sibal has pointed out that the telecom market is different from 2008 and 2010 (we wonder why), but also going on to say that the government did not have a free hand during the auction, due to which the current situation has emerged. Right.

These are provisional results, and the government can choose to scrap these auctions, and conduct a new auction. Telecom secretary R Chandrasekhar told The Economic Times that they are currently formulating a few policy decisions, including whether the auction should be re-conducted with a lower reserve price. FirstPost says that the Department of Telecommunication (DoT) is planning to ask Telecom Regulatory Authority of India (TRAI) to re-price the current reserve price of Rs 14,000 crore for 5MHz spectrum.

If the government scraps these auctions, it’ll mean further uncertainty in the telecom segment, because the status of Telenor (in particular) will hang in the balance. India will lose credibility as a destination for telecom investment (not that these auctions have helped). It’s quite a mess.

(Vikas SN contributed to this article)

Related:

2G Auction India: Day 1 Ended Without Any Big Bang Bids