Spectrum auction: Telcos place bids worth Rs 77,000 crore on Day 1

Telecom Minister Ravi Shankar Prasad said more spectrum in the hands of telcos would lead to better services
The Centre is likely to garner revenues beyond its muted expectation from 4G spectrum auction which began on Monday, but the mop-up would be a fraction of the Rs 3.92-trillion worth of airwaves put up for sale. Coming five years after the 2016 auctions, the much-awaited 4G spectrum bidding, where Reliance Jio emerged as the most active participant, has assured the government revenues of more than Rs 77,000 crore in four rounds on day one itself.

Likely to be one of the shortest spectrum auctions in recent times, officials said the process could be wrapped up as early as Tuesday in another round or two, displaying a lack of appetite for premium bands like 700 MHz and 2500 MHz. The 700 MHz band,  considered ideal for internal coverage, had gone unsold in the 2016 auctions as well, after which the Telecom Regulatory Authority of India (Trai) had reduced its price by 40 per cent. In the 2016 spectrum auctions, the government had earned Rs 65,789 crore.

Among the incumbents, Bharti Airtel is learnt to have bid for spectrum to fill up its airwave gaps, while  Vodafone Idea barely marked its presence. Jio’s need for 4G spectrum is the highest as its spectrum, acquired from RCom, is expiring.                       

While the final numbers would be available at the end of the auction, the government is looking at receiving Rs 12,000-13,000 crore as revenues in the current financial year from the bidding proceeds. A similar amount is expected during the next fiscal as well. Besides the down payment of anything between 25 and 50 per cent depending on the bands, bidders can pay in 16 installments spread over a time period. In the Union Budget 2020-21, the revenue target from communications services was Rs 44,000 crore.

By the end of the first day, 37 per cent of the spectrum by quantity and 19 per cent by value was sold. Airwaves in the 800 Mhz and 2300 Mhz bands received the maximum response. Nearly 65 per cent of the 800 Mhz spectrum—conducive for 4G--and 89 per cent of the airwaves offered in the 2300 Mhz band were sold. Reliance Jio, which had paid the highest earnest money deposit of Rs 10,000 crore, was believed to be a top buyer in 800 MHz.  

In case of 700 Mhz, 800 Mhz and 900 Mhz, the upfront amount to be paid is 25 per cent of the total price at which the bidding closes and in the other bands, the operators will have to submit half of the total amount as upfront payment.

Telecom Secretary Anshu Prakash said whatever spectrum is left unsold in the current auctions will be put up for sale in the next bidding process after consultation with the Telecom Regulatory Authority of India (TRAI). He hinted that the next auction--5G-- may happen in FY22.

Meanwhile, Telecom Minister Ravi Shankar Prasad said more spectrum in the hands of telcos will lead to better services.

He added that the 5G spectrum auctions will happen in their due time and in the meantime the industry can work towards building the ecosystem for the same.

The industry has maintained that the reserve price, especially in some bands, is very steep compared to the US, UK, Australia and Japan among others.

On December 16, 2020, the Union government approved a 4G auction that is expected to fetch the exchequer Rs 3.92 trillion by offering 2251 megahertz of airwaves. The coveted 5G spectrum was kept out of the offer.

MSTC is conducting the airwave sale for the government. The same public sector enterprise had executed coal auctions in early 2015 after the Supreme Court had cancelled allocation of coal mines in September 2014.

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