InFocusInfrastructureNewsPoliciesSectorsTechnology For SMEs

Spectrum Auction is Considered to be A Flop This Time

Sharing is caring!

India’s telecom spectrum auction ended in a virtual failure, closing within five days with a total commitment of only Rs 65,789 ($9.8 billion) crore, or about 11.6 per cent of the expected Rs 5.66 lakh crore ($8.5 billion).

NEW DELHI: The failure has been attributed to the high reserve price decided by the regulator and approved by the central government.

“It is a failure to an extent. The largest chunk of spectrum didn’t find any buyers because of serious miscalculation by the regulator and the central government on the current market value of 700 MHz spectrum. They overpriced it and the players decided to wait till the price becomes more realistic,” said Mahesh Uppal, Director of telecom consultancy Com First.

A total 2,354 MHz of spectrum was put on block for e-auctioning, but only 965 MHz were sold — or just 41 per cent of what was on offer. The money raised on the first day, of around Rs 53,000 crore, was an early portent that not everyone was enthusiastic about bidding for the airwaves. Even the earnest money deposit was low.

The auction went through 31 rounds for seven bands –700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. There were no takers for 700 MHz and 900 MHz — as had been warned by experts and the industry alike.

But Communications Minister Manoj Sinha tried to put a positive spin on the money to be raised.

“The total upfront payment due to the government is around Rs 32,000 crore. This is the highest in the last five years.

“It’s a big achievement that we could sell 965 MHz,” he said.

Top investment banker Goldman Sachs had predicted that the total proceeds from the auction will be around $7 billion — less than half of $16 billion obtained in the 2015 auction, and sharply below $85 billion if all spectrum was sold at the reserve price.

The Cellular Operators’ Association of India (COAI) said the lack of enthusiasm on the operators’ part was majorly due to unrealistic pricing, high debt and single-digit growth that the industry is currently reeling under.

“We are hopeful the government and the Department of Telecommunications will take cognizance of the role a high reserve price had on bidding, as far as the 700 MHz is concerned, and will re-calibrate the price so that spectrum in the band could be put up for auction, maybe two years from now,” said its Director General Rajan S Mathews.

Bharti Airtel, India’s largest telecom services provider, on Thursday said that it has acquired 173.8 Mhz of spectrum across 1,800 MHz, 2,100 MHz and 2,300 MHz bands for a total consideration of Rs 14,244 crore.

The new entrant, Reliance Jio, said it has acquired 269.2 MHz spectrum for Rs 13,672 crore.

“We have expanded our spectrum footprint thereby significantly enhancing capacity of our all-IP data strong network and ensuring world class services for all Indians. Jio is committed to taking India to global digital leadership by bringing the power of data to all Indians,” said Reliance Industries Chairman Mukesh D. Ambani.

Another key player, Idea Cellular, said it has acquired 349.20 MHz of spectrum for Rs 12,798 crore. “Idea is now well equipped to offer 4G services on its own spectrum across 20 service areas,” it said.

The auction would also fail to help in fully realising the revenue target of Rs 98,994.93 crore that had been provided for in the budget for this year against ‘other communications services’ — the bulk of which is scheduled from the fee paid for spectrum.

Other companies participating in the auction were Vodafone India, Reliance Communications, Aircel and Tata Tele, all together furnishing a total earnest money of Rs 14,653 crore.

The total amount of money committed through the auction will not immediately come to the government as the operators have been given the option of both upfront and deferred payment.

The biggest telecom auction did not start too well on Saturday with subsequent days seeing only marginal increments taking the amount to Rs 65,789.12 crore on the fifth day, when the process had to be called off for lack of further interest.


SMEStreet Desk

SMEStreet is fast growing platform dedicated to entrepreneurs from small and medium sized businesses (SMEs). Committed to facilitate Knowledge & Networking for Business Growth, SMEStreet offers value added content which shows the actual voice of Indian MSMEs.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top button
%d bloggers like this: