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BWA Auctions India: Day 2, Pan India Price Rs. 3198 Cr; Price For Top 7 Up Rs. 100 Cr

Day Two of the Broadband Wireless Access (BWA) Auction, and the auction appears to be following a different pattern from the 3G auction already:the price for a pan-India spectrum rose by 35.81% (compared to 34.54% on the previous day), to end up at Rs. 3197.79 crore; this is 82.73% (Rs. 1447.79 crore) higher than the base price, and close to the Rs. 3500 crore base price of the 3G auction. Compare this with the 3G auction, which began relatively cautiously, and was just 16.85% higher than base price at the end of day two.

BWA Auction India

The price for pan-India BWA spectrum looks like it will be double of the base price by end-of-day tomorrow, and higher than the 3G base price of Rs. 3500 crores. As things stand today, the Indian government will raise at least Rs. 9593.37 crores from the BWA auction, Rs. 6935.58 crore of which will be from the private operators. One additional slot each is reserved in each circle for MTNL (Delhi and Mumbai) and BSNL (rest of India).

What’s noticeable is that the price for the top seven circles remained the same for the second day running: the price for Delhi, Mumbai, Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu, all rose to Rs. 332.96 crore, 100 crore higher than the previous day. So the price of spectrum for these seven circles was raised Rs. 20 crore in each round on Day 1 and 2, and is going to be increased by Rs. 20 crore again when bidding resumes on Day 3.

Unlike BWA, in case of the 3G auction, the prices for the seven circles were different from the very first day, although the price for Delhi and Mumbai did not begin to rise beyond the others split until the end of day 7: perhaps it’s a function of the fact that there are 11 bidders for 2 slots of 20MHz spectrum in case of BWA, while there were 9 bidders for 3-4 slots of 5MHz spectrum in case of 3G, as well as the fact that the base price of BWA is half of that of the base price of 3G. Less supply, more buyers, hence more bids. The scarcity, in terms of number of slots, not spectrum, might just help the Indian government raise more money than expected.

Remember that the 3G Auctions closed 378.59% over the base price. If BWA follows the same pattern (although all indications are that it isn’t going to), the pan-India price for BWA would be Rs. 8375.33 crore, and the Indian government would raise Rs. 25, 125.98 crore from the auction. Lets see how far off the mark we are with this…

Note that the price of spectrum in Haryana, Himachal Pradesh, Assam, North East, and Jammu & Kashmir did not increase during the day, while price for spectrum in Rajasthan, West Bengal and Orissa declined at the end of Day 2. Price for Kolkata and Punjab went up 55.15% to Rs. 48.44 crore each.

More details on how the spectrum auctions proceed here.

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