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Soumik Dey
Soumik Dey


Tepid response to govt's biggest-ever spectrum sale

mobile manufacturing (File) Representational image

At the conclusion of the final day of the most anticipated five-day telecom spectrum sale on Thursday, telecom operators closed the auction by spending slightly above Rs 66,789 crore. This is woefully lower than the Rs 5.43 lakh crore expected from the auction by the government and the Department of Telecom (DoT), who had placed 2,345Mhz of telecom airwaves under the hammer.

Last year, the government had netted close to Rs 1.11 lakh crore from auction of telecom airwaves. As per latest reports, the government found bidders for only about 60 per cent of the spectrum (964.8 Mhz) while the rest remained unsold. The current auction was for seven spectrum bands—700Mhz, 800 Mhz, 900Mhz, 1900Mhz, 2100Mhz, 2300Mhz and 2500Mhz for a 20-year period. Key among these were the 700 and 800Mhz bandwidth which best supports all available 2G, 3G and 4G technology telecom networks.

Seven operators—Airtel, Aircel, Idea Cellular, Tata Teleservices Ltd, Relince Jio and Vodafone— participated in the auction. Until the end of the auction, both the premium bands hadn't not found any takers. Government has fixed high bidding price on these spectrums, expecting them to be on a high demand as most telcos are looking to have a robust network ready for a nationwide rollout of 4G services to more than 22 crore mobile phone users.

While Vodafone emerged the largest bidder in the auction, spending Rs 22,000 crore, Idea also ended up spending heavily for 4G spectrum in key circles like Delhi and Mumbai with a bill of Rs 19,000 crore plus. Reliance Jio, too, is expected to have spent Rs 14,000 crore in the auction. Market leader Bharti Airtel bought airwaves worth Rs 21,000 crore in the recent spectrum auction.

The most premium 700Mhz and 900Mhz spectrum was tagged for Rs 4,855 crore in Andhra Pradesh circle, Rs 7,975 crore for Delhi circle and as low as Rs 220 crore for telecom circles in northeast. "These two bands remained almost untouched for all circles by telecom operators. Some bidding was done instead on the 800Mhz spectrum," said J.S. Deepak, telecom secretary, after the auction concluded. "Instead, operators went for the 800 Mhz spectrum in some places," he added.

In Gujarat, spectrum in 800Mhz was sold below the minimum bid (Rs 419.31 crore vis-a-vis government's reserve price of Rs 427.69 crore). All other spectrum, too, managed to be sold either at reserve price or slightly below the government-set price, DoT reports on the spectrum auction showed. Telcos preferred the lower priced 1800, 2300 and 2500Mhz bands which, too, can support 4G services alongside either a 2G or 3G service.

The response on the first day was very good. At the end of first day, spectrum auction bids worth Rs 53,531 crore were received. Later, the telcos took a more cautious approach. Biddings on second and third days of the auction took the total to Rs 60,969 crore, while the final day auctions took the tally to Rs 66,789 crore.

As per the changes made in the recent auction rules the government hiked the upfront payment for telcos. While the government had set the upfront payment at 25 per cent pf the total value of the spectrum purchased for the premium 700 Mhz and 900 Mhz bands, for all others, the upfront payment was raised to 50 per cent. While Telecom Minister Ravishankar Prasad was unavailable for comments, Junior Telecom Minister Manoj Sinha, was learned to be in his constituency in Ranchi.

Telcos had sought a month's delay in the auction which was originally due to be held last month, after the new auction rules were notified by the Department of Telecom. "The auction had three obstacles— unrealistic pricing, high debts and a single digit growth for the industry as a whole," said Rajen Mathews, director general of Cellular Operators Association of India (COAI).

According to Mathews, winning the airwaves would only mean half the battle for most telcos as the roll out of an enhanced 4G netwrok is likely to see telcos ending up spending a similar amount spent in the auction for upgrading and modernising their existing networks.

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Topics : #telecom

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