Spectrum Auction Day 1 : Govt Mops Rs 60,000 Cr

In what is turning out to the biggest spectrum auction in the country, the government is assured of mopping up more than Rs 60,000 crore from the bids in the first day itself.

The auction for airwaves in four bands -900 Mhz, 1800 Mhz, 2100 Mhz and 800 Mhz- started on Wednesday, 4th of March, with all the big players like Airtel, Vodafone, Idea and Reliance Jio in the fray.

The first day of the spectrum auction saw 6 rounds of bidding with bids in all four bands. Of these the 900Mhz spectrum saw intensive bidding with all spectrum assured of getting sold at prices on an average 30% higher than reserve prices. Some circles like UP-W have seen even 60% higher prices.

The government is expecting around Rs 82,000 crore from the spectrum auction but seeing the way the bidding took off on the first day, it is expected to reach much higher.

Besides 900 Mhz band, the maximum traction was witnessed in the 800 Mhz spectrum band. This is little surprising as there was no takers except Sistema for the same band in the last auction that happened in March 2013, despite the reserve price set at half the current base price.

Of the Rs 60,000 crore auction value from the first day, around Rs11,000 crore comes from 800 Mhz and 2100 Mhz bands which are fresh spectrum unlike that of 1800 Mhz or 2100 Mhz which are there for renewal.

The spectrum auction is set for aggressive bidding this time as licenses of all top telecom operators are going to expire this year. Bharti Airtel’s licences in six circles, Vodafone India in seven circles, Idea Cellular in nine and Reliance Communications in seven circles are coming for renewal in 2015-16.

If all operators were to renew their existing spectrum, the cash outflow will be 22-28% above the reserve prices.

“It is still the first day and we believe that the spectrum demand has already overshot the street expectations. We expect sharp correction in the telecom stock prices in the coming weeks as the auction progresses. Our broader worry on the sector with the potential entry of RJio also remains,” said Sunil Tirumalai of Credit-Suisse.

To participate in the spectrum auction, the operators have deposited an earnest money of Rs 20,435 crore. The other operators who are participating in the auction are Aircel, Tata Teleservices and Uninor.