Spectrum auction kicks off with a bang; bidding tops Rs 60,000 crore

New Delhi(PTI): The latest round of spectrum auction in four bands kicked off with a bang on Wednesday with the first day bidding crossing a whopping Rs 60,000 crore. Aggressive bidding was seen in the 900 megahertz (MHz) band.

“Going by the quotations on the first day the response was better than expected,” telecom secretary, Rakesh Garg said.

“It (the first day of the auction) went off well with the bidding already reaching Rs 60,000 crore. There was aggressive bidding in the 900 MHz band, which is fast spreading to 1800 MHz and 2100 MHz. The bidding for 800 MHz airwaves was also good,” he said.

The auction saw eight companies participating in the bidding with 385.75 megahertz (MHz) of telecom spectrum in four bands put on the block. These were Bharti, Vodafone, Idea, Aircel, Tata Tele, Reliance Communications, Reliance Jio and Telewings, who have deposited a total of Rs 20,435 crore earnest money.

The high collection of earnest deposit was itself an indication of aggressive bidding. The total airwaves up for bidding include 103.75 MHz in the 800 MHz band, 177.8 MHz in 900 MHz band, 99.2 MHz in 1,800 MHz band and 5 MHz in 2,100 MHz band.

G Krishna Kumar, a telecom professional from Bangalore, said aggressive bidding for airwaves will further hit the already stretched balance sheets of telecom companies and will push up tariff as increased costs will be passed on to the consumers.

He said that with subscriber base for most telcos’ voice services already having topped, they will chase subscribers for data services, where a huge potential still remained untapped.

“Going forward, data is going to be their priority. They will have to be clever in providing their data-plans in a way that there is growth in the segment,” he said.

The initial estimates of revenues, based on the reserve prices set by the government, to be earned by the government from selling the airwaves in different bands have been pegged at Rs 80,000 crore to Rs 1 lakh crore.

This is the highest ever revenue collected in any auction till now and will help the current government to easily meet its fiscal deficit target of 4.1% of the GDP in this fiscal. In the last auction, which was held in February last year, the government raked in Rs 62,162 crore.

The auction is expected to carry on for several weeks, including Thursday, which is a public holiday. In the past too, bidding for spectrum has lasted for longs hours for weeks.

At the outset, the latest round of the auction was expected to be of fierce bidding with incumbents Bharti and Vodafone trying to garner as much spectrum as possible to keep their lead in the voice services market and expand the data services segment. Mukesh Ambani’s Reliance Communications, which is yet to launch its services, is expected to up the competitive heat by going aggressively after more airwaves to take on established players.

Many of the telcos’ licences will be coming up for renewal in 2015-16. These include nine of Idea, six of Airtel and seven each of Vodafone and Reliance.

Abiding the court order, this time the government will not be releasing information on individual companies or the winners of spectrum until the end of the auction.