Telecom spectrum auction gets bids worth Rs 60,000 crore on first day

The biggest ever telecom auction of 2G and 3G airwaves began on a high note on Wednesday with operators making bids worth an estimated Rs 60,000 crore after six rounds of bidding in all four bands.

The bidding in the auction, through which the government was expecting to raise over Rs 82,000 crore, is set to resume on Thursday. The final amount may go much higher if bids continue at such an aggressive pace.

Six rounds of bidding were concluded on Wednesday with bids worth Rs 60,000 crore coming in all the four bands on offer, a source privy to the development said.

Incumbent Bharti Airtel and Vodafone are locked with billionaire Mukesh Ambani's upstart carrier Reliance Jio to protect their spectrum they need to carry voice and data in the domestic smartphone market, which is the world's second-biggest.

In all, eight bidders are in fray. The auction is the biggest ever sale of 2G and 3G airwaves which may fetch the government over Rs 82,000 crore at the base price.

The government is selling airwaves in four bands: 2,100 megahertz (Mhz), 1,800 MHz, 900 MHz and 800 MHz. While 900 Mhz and 2,100 MHz bands witnessed good bidding, 800 MHz was the surprise band with lot of interest. However, there was not much bidding in Mumbai, Delhi and Karnataka circles in the 2,100 MHz band, the source said.

The government will not release results of the auction becuase of a court ruling.

"The Indian telecoms auction starting today (March 2) is likely to see intense bidding by telcos to retain their existing spectrum and to acquire new spectrum as supply is limited," Fitch Ratings said.

A total of 380.75 MHz of spectrum is on offer in the premium 900 MHz band, 1,800 MHz and 800 MHz while 5 MHz is up for bidding in the 2,100 MHz band across 17 out of 22 telecom areas or circles in the country.

Most of the spectrum put up for auction is presently held by Airtel, Vodafone, Idea Cellular and Reliance Telecom. Their licences are expiring in 2015-16.

Mobile licences for nine circles of Idea Cellular, six circles of Airtel and seven circles each of Vodafone and Reliance Telecom are coming up for renewal. Overall, there are 29 licences in 18 service areas which will expire in 2015-16. These licences hold 184 MHz spectrum in the 900 MHz band and 34.2 MHz in 1,800 MHz band.

It is mandatory for these companies to bid for spectrum if they have to continue offering mobile and other telecom services as their permit is expiring. The government had raked in Rs 62,162 crore from the last spectrum auction held in February 2014.

At the end of Round 6, excess demand was witnessed for 900 Mhz spectrum in the circles of Himachal Pradesh, Odisha, Punjab, Uttar Pradesh (East) and (West), and for 1800 MHz band in Andhra Pradesh.

The reserve price of the spectrum which is under the auction presently is around Rs 49,000 crore but bids amounting to about Rs 60,000 crore have been received as of now, sources said.

Price increment applicable for Round 7 stands for Bihar, Himachal Pradesh, Odisha, Punjab, Rajasthan, Uttar Pradesh (East) and (West) in 900 MHz band. While the same would be for Andhra Pradesh in 1800 Mhz band, and for Assam, North East, Odisha and Rajasthan in 2100 MHz band.