Higher prices fail spectrum auction

New Delhi: India’s spectrum auction — billed as the largest ever in the country — ended up as a damp squib on Thursday, with the government finding buyers only for 60 per cent of airwaves on the offer. The auction will help the government to raise Rs 65,789 crore, which is Rs 1,208 crore less than the budget estimate of Rs 64,581 crore. If all the spectrum on offer was sold even at  the base price, government would have got bids worth Rs 5.6 lakh crore.

Thirty one rounds of bidding took place over the last five days. Out of 2,354 mhz of spectrum put on block, bids were received for just 964 mhz.  The government expects Rs 32,000 crore in upfront payment from spectrum auction payment and the rest in instalments. No bid came for the most expensive spectrum 700 mhz, offered for the first time in an auction.  It was auctioned at a reserve or base price of Rs 11,485 crore per mhz.

For buying pan-India 5 mhz spectrum in this band, a telecom operator would have to pay a minimum of Rs 57,425 crore if no counter bids came in. This band alone had the potential to fetch bids worth over Rs 4 lakh crore. The telecom operators, who have a debt of Rs 3.80 lakh crore, however, stayed away from 700 mhz spectrum and mostly submitted bids in  2500 mhz, 2300 mhz, 800 mhz and 1800 mhz bands.

Most of the operators bided selectively to fulfil gaps in their spectrum umbrella. All spectrum in 2300 mhz band put on block was sold out. Reliance Jio and Airtel have previously bought this band for launching 4G services. No bids were made for 900 mhz spectrum. “The tepid response to spectrum in 700 mhz is owed to a high reserve price. The lack of enthusiasm was majorly due to its unrealistic pricing, high debt and single-digit growth in the industry,” said GSM operators association COAI.

Vodafone was the most aggressive, taking home Rs 20,000 crore worth of spectrum. Bharti Airtel acquired 173.8 mhz spectrum across 1800/2100/ 2300 MHz bands for Rs 14,244 crore. With this purchase, Airtel now has 4G and 3G spectrum in all circles. This was followed by Mukesh Ambani’s Reliance Jio, which spent Rs 13,672 crore. Idea bought spectrum worth Rs 12,798 crore in the auction. The government had got Rs 1.1 lakh crore from the sale of spectrum in March 2015.