Business
Aggressive bidding in one spectrum band led to fall in net bid price
By
By Arvind Padmanabhan New Delhi, March 11
The Rs.1,800 crore drop in
the total value of highest provisional bids on the seventh day of
e-auction of spectrum for telecom services was the result of a shift in
the preferred band away from 900 MHz due to aggressive bidding, official
data showed Wednesday.
In the 900 MHz band, there were two
excess bids in terms of the blocks on offer at the end of Day One. But
by the end of Day Seven, there was a shortfall of bids to the extent of
298 blocks.
In the Bihar circle, for example, at the end of the
first day and some six rounds of bidding, the highest provision bid was
Rs.42.24 crore per block for the 900 MHz band, which almost doubled to
to Rs.Rs.80.56 crore per block by the end of the seventh day.
As a
result, where there were bids for all the 31 blocks on offer for the
Bihar circle at the end of the first, the seventh day saw six blocks
going vacant, with offers for 25 blocks -- a shift away from 25 blocks.
Such a scenario was even more stark for Himachal Pradesh.
In
this circle, there was, in fact, excess demand for 30 blocks after the
first day of bidding. But as bidding progressed and the highest bid per
block price rose from Rs.8.44 crore to Rs.11.6 crore, there were no
offers made for any of the 62 blocks on the table in the 900 MHz band.
"There
was activity in two new service areas in 1,800 MHz band. There is a
shift in activity from the 2,100 MHz and 900 MHz bands to 1,800 MHz and
800 MHz bands," a senior official said after the seventh round of
bidding concluded.
The official said the bidding norms are such
that it allows a company to withdraw an earlier offer for a particular
band and make a bid in another band if it sees that such a switch will
prove beneficial, financially and in terms of spectrum management and
growth potential.
Hence, the number of blocks sold provisionally
at the highest bid price sees a drop. Thereby, the results the total
value of bids for that circle under the band in question also sees a
decline. "This is normal. As bidding progresses, this fluctuation
settles down," the official said.
The fresh interest was seen in
Kolkata where there were no takers for all the 35 blocks on offer in the
1,800 MHz band after the first day. But at the end of the seventh day,
there were as many as 98 bids, or 63 excess bids. This circle has no
block on offer in 900 MHz band.
The government is offering in
this e-auction a total of 103.75 MHz in the 800 MHz band over 85 blocks,
177.8 MHz in the 900 MHz band over 889 blocks, 99.2 MHz in 1,800 MHz
band over 496 blocks and 5 MHz in the 2,100 MHz band over 17 blocks.
Eight
companies are in the fray -- Vodafone, Bharti, Idea, Telewings, Aircel,
Tata Tele, Reliance Communications and Reliance Jio. The auction is
crucial for some of them as their 20-year licence term draws to a close
in December.
Fresh data on e-auctions also showed that the shift in band was not necessarily within a circle.
"This
is due to several factors. First, there is a limited kitty a bidder has
to operate within. Then, one has to consider the growth potential of
each circle. One also has to look at the fact that spectrum licence
issued earlier could expire in December," an industry source said.
In
Tamil Nadu, for example, even as the lack of interest continued in the
800 MHz band, there was a stark change in the 1,800 MHz band for this
circle. From as many as 70 vacant blocks after the first day, the
numbers dwindled to 17 after the seventh.
The highest bid price, however, remained unchanged at Rs.45 crore per block after the two days.
In
Rajasthan, too, from 52 vacant blocks out of the same number on offer
after the first day, the numbers fell to 27 after the seventh day, as
the highest bid price went up from nil, against the reserve price of
Rs.12 crore, to an actual bid of Rs.13.2 crore.
(Arvind Padmanabhan can be reached at [email protected])