On the first day of the much awaited Broadband Wireless Access (BWA) Auction, the price for a pan-India spectrum rose by as much as 34.5% above the base price of Rs. 1750 crore, to close at Rs. 2354.53 crores. Bids totaled Rs. 604.53 crore more than the base price, at the end of 5 clock rounds. Remember that this auction format enabled price discovery for a circle, and all those who win will spectrum in particular circle, will pay the same price for it. More details on how the spectrum auctions proceed here.
With this, the Indian government stands to receive Rs. 7063 .59 crore from the BWA auction, and Rs. 4709.06 crore from private telecom operators. 2 slots of BWA spectrum are being auctioned in 22 circles in India, and one slot per circle has been reserved for MTNL (Delhi and Mumbai), and BSNL (rest of India). Just 2 slots per circle means that like in case of the 3G auction, it’s unlikely that any single player will receive pan-India spectrum.
We’re expecting this auction to proceed at a quicker pace than the 3G auction, but not necessarily end earlier (who knows): there are 11 bidders for the 2 slots in the 22 circles, so expect greater competition. Apart from the usual suspects – Airtel, Aircel, Idea Cellular, Reliance, Tata Communications and Vodafone who also featured in the 3G Auction, the BWA auction has four other entities – Tikona Wireless, Spice, Augere, Infotel Broadband Services and even Qualcomm.
The case of Qualcomm is particularly interesting, since it has said it wants to win spectrum and then partner with an Indian entity to roll out its services, eventually exiting the business once rolled out. Do read: Qualcomm To Bid For India’s Wireless Broadband Spectrum Auction. Tikona has also recently received approval to raise money for spectrum auctions.
So how was day 1 of the BWA auction?
— Delhi and Mumbai saw the most demand – with 8 bids (6 in excess), followed by Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu, Kolkata, and Punjab, with 6 bids each
— Delhi, Mumbai, Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu ended the day at Rs. 232.96 crore, and their price will be increased by Rs. 20 crore. Early days yet, but these 7 circles account for 69% of total bids.
— Haryana, Rajasthan, West Bengal, Himachal Pradesh, Orissa, Assam, North East and Jammu & Kashmir saw deficient demand, with one bid each at the end of round 5.
— BWA Day 1 results