India's spectrum auction elicits Rs.60,000 crore in six rounds on Day One

New Delhi: A total of six rounds of bidding took place on Day One of the auctions of radio frequency spectrum, or airwaves, for telecom operators with a total offer for Rs.60,000 crore, sources said on Wednesday.

"We have received bids in all bands. There was some good bidding in the 800 MHz and 1,800 MHz bands, whereas 2,100 MHz is yet see some traction. Auction will continue tomorrow (Thursday)," a source said. The bid amount is already 50 percent more than what the government had budgeted for.

The total spectrum put to auction is 103.75 MHz in 800 MHz band, 177.8 MHz in 900 MHz band and 99.2 MHz in 1,800 MHz band for second generation (2G) telephony. The government has also put up 5 MHz in the 2,100 MHz band third generation (3G) telephony.

The eight telecom service providers participating in the auctions are -- Reliance Communications, Reliance Jio, Bharti Airtel, Vodafone India, Tata Teleservices, Uninor, Idea Cellular and Aircel. They have together submitted earnest money of Rs.20,435 crore, which is two-and-a-half times what had been called for.

The Department of Telecom (DoT) has selected Kolkata-based mjunction services -- an information technology and internet company promoted 14 years ago as a 50:50 venture by Steel Authority of India Ltd and TATA Steel for conducting the spectrum auction. The auction is taking place from 9 a.m. to 7.30 p.m. Monday to Saturday.

The matter of auction was under litigation even before it started. But the Supreme Court has permitted the government to go ahead with the process from March 4 but await its directions before finalisation of the bids.

The reserve price approved is Rs.3,646 crore pan-India per MhZ in 800 MHz, Rs.3,980 crore for 900 MHz band pan-India, and Rs.2,191 crore pan-India in 1,800 MHz band. The government also approved a reserve price of Rs.3,705 crore per megahertz for 3G spectrum.

As per estimates, at the base price alone, the auction will translate into some Rs.82,000 crore, even as the actual process is estimated to fetch around Rs.100,000 crore. In December 2015, seven licences each of Idea Cellular and Reliance Communications, four licences of Bharti Airtel and six licences of Vodafone will complete their 20-year term after which they have to be renewed. In total, there are 29 licences in 18 service areas which expire in 2015-16.

The bidding process is using fixed internet protocols for the e-auction as dynamic IP addresses are not allowed. The objectives is to obtain a market-determined price of spectrum in the bands through a transparent process, ensure efficient use of spectrum and avoid hoarding, stimulate competition in the sector, promote rollout of the respective services and maximise revenue proceeds from the auctions within the set parameters, officials said. The 2010 auctions took 34 days and 183 rounds of bidding.

The one in 2012 lasted two days while a year later, it took just over four hours, but these were smaller ones. In 2014, it took place over 10 days with 68 rounds. After 10 days of aggressive bidding by telecom service providers, the government had garnered an Rs.61,162.22 crore from the auction of 900-MHz and 1,800-MHz spectrum in last year's auction.

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