Spectrum Auction- Telecos stayed from Expensive 700 Mhz

The 700 Mhz band width did not see any ray of hope even on the third day of the Spectrum auction. The telecos decided to maintain their distance from the high-cost 700 Mhz as well as 900 Mhz bands even on the third day of bidding.

Sources familiar with the development added the spectrum auction received additional bids worth Rs 3,100 crores on the third day, i.e., 5th October 2016 (Tuesday) to take total commitments to Rs 59,981 crores, thereby, leaving two-thirds of total quantum of on-offer airwaves unsold as bidders stayed away from high-cost bands as mentioned earlier.

According to internal sources, the auction entered its 16th round on the third day. Bids worth Rs 59,981 crores have come for 750 MHz of spectrum out of 2354.55 MHz put for auction.

Sources further added there has not been any demand yet for the 700 MHz and 900 MHz frequencies. The bidding interest continues to be largely focused around 1800 MHz and 2300 MHz that can be used by operators to provide 4G services.The second day (Monday) of the auction had also seen an apathetic response from the bidders with additional bids of Rs 3,341 crores only to take the total commitments to Rs 56,872 crores. On Monday, the bidding had closed with a cumulative 11 rounds. A total of 2,354.55 MHz of frequencies amounting to a total of Rs 5.63 lac crores at base price have been put up for auction across all the seven bands.

The finance ministry in the Budget pegged the revenue target at Rs 98,995 crores from the telecom space. This included Rs 64,000 crores from the auction. The premium 700 MHz band alone has the potential to fetch bids worth over Rs 4 lac crores if the entire spectrum in this band gets sold at the base price set earlier.

However, at a reserve or base price of Rs 11,485 crores for every MHz, it has been considered to be priced very high in spite of its inherent advantages in terms of propagation ability and potential savings. Hence we have not witnessed due attention from the participants.

Seven telecom companies – Bharti Airtel, Vodafone, Idea Cellular, Reliance Jio, Aircel, Reliance Communications and Tata Communications

• are in the competition for acquiring 3G and 4G airwaves that are going to be very important for maintaining competitive edge in the market and offering next generation services in the world’s second-largest telecom market.

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