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3G Auction India: Right Approach? Day 33, Demand Increases As Bids Reach Rs. 165.31Bn

On the day, where only four rounds were held, there was excess demand only for Delhi, Kolkata, Punjab, Himachal Pradesh and Bihar. As Srinivasa Addepalli had explained earlier, as long as there is excess demand, the auctions will continue. So don’t hold your breath. Looks like none of the telecom operators want to give in. And while that may work out well for a government trying to address the fiscal deficit situation by raising money via the 3G auctions and disinvestment, it doesn’t address the core problem of rampant fiscal indiscipline, Niranjan Rajadhyaksha argues in an excellent piece in Mint (via Navam Capital’s Rajeev Mantri). The Economic Times has done some calculations, based on 3G auction prices, about how much the 2G give-away cost the government.

Sunil Jain also points out, rightly so, that the TRAI guidelines on 2G auction have been timely, and have put the ball in Telecom Minister Raja’s court: it is, once again, his decision to make. Time for lobbyists to line up outside his office, and make phone calls for the IT Department to tap. Looks like, in this government, the buck stops with various ministers, not the Prime Minister.


Back to Day 33 of the 3G Auction (can’t wait for BWA to begin, can you?): At the end of 180 clock rounds, the price for pan-India spectrum is Rs. 165.31Bn, 372.32% above its base price of Rs. 35Bn. The price rose Rs. 3.68 Bn during the four rounds on the day, compared to Rs. 3.49Bn, Rs. 3.98 Bn and Rs. 4.16 Bn on the previous three days, thus reversing the trend of declining bid amounts. The Indian government will earn Rs. 668.02 Bn (around $14.75 Bn) from these auctions.

3G Auction Status

When bidding resumes, price for circles with excess and on-par demand will be raised by 10 percent, while price for circles with deficient demand will remain the same.

– Excess Demand: Delhi, Kolkata, Punjab, Himachal Pradesh, Bihar
– Par Demand: Mumbai, Kerala, Rajasthan, Orissa
– Deficient Demand: Maharshtra, Gujarat, Andhra Pradesh, Karnataka, Tamil Nadu, Haryana, UP (East), UP (West), Madhya Pradesh, Assam, North East, West Bengal, Jammu & Kashmir

(Previous day: Excess, Par, Deficient)

Delhi & Mumbai

– Delhi leads at Rs. 32.84, up Rs. 1.28Bn (4.06%) for the day from Rs. 31.56Bn, while Mumbai is at Rs. 31.83Bn, up Rs. 1.24Bn for the day from Rs. 30.59Bn. The increase in price for Mumbai has been double of that on the previous day
– Delhi & Mumbai rose the most in absolute terms for the day.
– Price for many circles rose more than 4% on the day: 4.06% for Delhi, Mumbai, Kolkata and Kerala, 4.05% for Punjab, Bihar and Orissa, and 4.02% for Himachal Pradesh.
– Together, Delhi & Mumbai account for Rs. 64.67Bn, around 39.12% of the total bids.

Other circles

– There has been excess demand for Kolkata and Punjab for four straight days
– Clearly the top 4 – Mumbai, Delhi, Karnataka and Tamil Nadu – account for 57.44% of the pan-India price, at around Rs. 94.96Bn
– The price of Maharshtra, Karnataka, Tamil Nadu, Haryana, Madhya Pradesh, West Bengal, Assam, North East and Jammu & Kashmir did not increase during the day.

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