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India’s Spectrum Auction ends: Rs 1.09 lakh crore in bids, 37% above reserve price

2015 spectrum auction

The 2015 spectrum auction has concluded after 19 days and 115 rounds of bidding. Total value of bids at the end of Day 19, which saw 5 new rounds of bidding, is Rs 1,09,874 crore. This is 36.86% higher than than the Rs 80,277 crore the government had targeted from the auctions, based on the reserve price set by it. The premium paid by telcos over the reserve price is likely to lead to an increase in tariff.

No details of winners yet

However, the actual allocation of spectrum to the telecom operators will take place only after March 26 – the next scheduled Supreme Court hearing on multiple cases questioning the auction rules and criteria. This also means that the upfront payment from winning bidders is not likely to come into the govt’s kitty during this fiscal year, which ends on March 31. Note that telcos are required to pay 25% of the winning bid in case of the 800 MHz and 900 MHz bands and 33% of the winning bid in case of 2100 MHz and 1800 MHz bands as upfront payment within 10 days of close of bidding. They can pay the balance amount over 12 years: beginning with a moratorium period of 2 years and 10 yearly installments thereafter.

A total of 470.75 MHz spectrum was put for auction of which 418.05 MHz or 89% spectrum has been provisionally allocated. The provisional winning bids for the 900 MHz band were 81.4% higher than the reserve price, 26.5% higher than the reserve price for the 800 MHz band, 7.8% higher than the reserve price for the 1800 MHz band, and 42.4% lower than the reserve price for the 2100 MHz band.

Telcos not commenting

Telecom operators aren’t commenting on the just concluded spectrum auctions, because of the impending Supreme Court hearing. Vodafone India’s official spokesperson told MediaNama that they participated in the recent spectrum auction to ensure continuity of business and service to their customers. The spokesperson added that they will make a further announcement once the DoT announces the results of the auction.

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It’s worth noting that Airtel, Idea, Reliance Communications and Vodafone primarily participated in the 2015 spectrum auctions to defend the existing spectrum they hold. The mobile licenses for 9 telecom circles of Idea, 7 circles each of Vodafone and Reliance Communications and 6 circles of Airtel are coming up for renewal in 2015-16.

Quick recap

As expected, during the first few days of the auctions, bidding was mostly restricted to the 900 MHz band, but eventually plateaued by Day 8. Bidding in the 900 MHz band once again picked up towards the end of the auction. Day 15, 16 and 17 saw heavy bidding in the Rajasthan, Uttar Pradesh (East) and Uttar Pradesh (West) circles.

Bidding in the 800 MHz was slow to begin with but by Day 5 telcos seemed to have shifted focus to the relatively lower priced band. This was possibly because during the recently concluded auctions telcos were allowed to forgo bids made in earlier rounds in a particular band for spectrum in another band, if it was financially beneficial and helped in spectrum management. The Delhi, Maharashtra, Assam and North East circles attracted most bids for 800 MHz spectrum.

The 1800 MHz band also witnessed an increase in activity after the first week of the auctions. The Haryana and Kolkata circles attracted most bids. There was limited action in the 2100 MHz band: On Day 7 and Day 8 there were bids for 2100 MHz spectrum in Assam, Rajasthan, North East and Uttar Pradesh (West) circles, but no more before and after this.

It was clear on Day 18 that the auction was nearing the end as there was no excess demand for spectrum in any of the four spectrum bands, which was a first for the entire duration of the auction that commenced on March 4.

Note: Typo in headline corrected.

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