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3G Auction India: Day 22, No Excess Demand At Rs. 75.47B Force Minimum Activity Levels To 100%

With the price for one pan-India slot of 3G spectrum reaching Rs. 110.47 billion, for the first time since it began 22 days ago, India’s 3G auction received no excess bids. None. The price is now 215.63% (Rs. 75.47 billion) higher than the base price of Rs. 35 billion, and all indications are that the auction will end very soon, because the minimum activity required to be shown by a bidder has now been raised to the maximum: 100 percent. Simultaneously, price for circles which saw no excess demand (but not deficient demand) have also been raised by 10 percent each.

So telecom operators can either bid and stay in the race, or now wait it out to see if they get anything at all. No excess demand also indicates that some telecom operators have decided not to bid at all, or the bids were distributed between circles to only meet the activity requirement guidelines.

At the same time, here’s a warning from the Economic Times: winners of 3G spectrum may have to wait for a few months beyond September 2010 to receive spectrum. Spectrum was expected to be released by the defense forces, which would switch to a network set up by BSNL, but there’s been a delay in issuing tenders by BSNL, among other issues. Not that BSNL benefits from a delay in spectrum allotment to private telecom operators, right? Given a choice, I think telecom operators would rather have the auction over and done with: the same auction held next year could well have seen a higher base price, and higher costs.

Notes on the auction:

– Price increased by Rs. 2.976 billion over 6 rounds on 5th May, compared to Rs. 4.018 billion over 6 rounds on the previous day. This is, however, not the lowest increase in the last one week.
– Price for a pan-India spectrum slot is now over 3 times the base price of Rs. 35 billion – approximately 75.47 Bn higher.
– In line with the trend, 11 circles did not register appreciable increase in price; yesterday, it was 13 circles
– Together, Delhi and Mumbai account for 33.9% of the pan-India price; consistently remained above 30% over the past week or so.

– Delhi, Mumbai, Maharashtra and Karnataka account for 58.3% of the pan-India price
– Price for 7 circles – Madhya Pradesh, West Bengal, Himachal Pradesh, Assam, North East and Jammu and Kashmir been more or less the same for 10 days now.
– Karnataka led the charge, with the price increasing by 6.14%, Mumbai 5.1% and Delhi 5.08%
– Price for Jammu & Kashmir hasn’t increased for all 21 days, and though it has occasionally received bids, it has never witnessed 100% demand.
– 17 circles had less than par demand on May 1st.

Download all the 3G Auction documents here

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