Business
India's spectrum auction attracts net bids of over Rs.109,000 crore
New Delhi, March 25
The e-auction of radio
frequency spectrum, or airwaves, for telecom operators concluded
Wednesday after 19 days and 115 rounds of rigorous bidding with
officials placing the initial estimate of total commitments at over
Rs.109,000 crore.
"We are still in the process of putting the
figures together. But our preliminary calculations suggest it will be
over Rs.109,000 crore," a senior official in the ministry told IANS,
giving an initial estimate of the net amount committed, taking into
account all the winning bids.
If this figure proves correct, the
amount will then surpass the previous high of Rs.106,200 crore that the
government had received in the 2010 auction, which was spread over 34
days with 183 rounds of bidding.
Officials said the names of the
successful bidders will not be divulged since the Supreme Court, while
allowing the e-auction to proceed, had directed that its consent be
taken before awarding spectrum, due to litigations filed by interested
parties. The court is to take a call on that Thursday.
The eight
companies that participated in the auction were: Reliance
Communications, Reliance Jio, Bharti Airtel, Vodafone India, Tata
Teleservices, Uninor, Idea Cellular and Aircel. The winners will have to
pay around a third of the winning bid price within 10 days and the rest
by 2027.
The central government has budgeted for Rs.43,161.72
crore from e-auctions of spectrum for the current fiscal. The reserve
price for the entire spectrum in the four bands on offer, across India,
was around Rs.80,000 crore.
The commitment for telecom spectrum
comes over and above the Rs.200,000 crore that India Inc has already bid
under two phases of auctions for award of coal blocks. But the proceeds
from the auction of coal blocks will go to the respective state
governments over 30 years.
"I am glad the presumptions some
people had, that spectrum is worth zero, have been belied," said Finance
Minister Arun Jaitley, referring to the criticism India's official
auditor faced when a notional loss of Rs.176,000 crore was assigned for
handing over the airwaves without auctions.
But his predecessor
Kapil Sibal of the Congress said the auctions were flawed. "The telecom
sector is hugely in debt to the extent of Rs.340,000 crore. Now, in
paying for the high spectrum prices, there'll be no money for investment
in infrastructure," Sibal told IANS just ahead of the conclusion of the
auction.
During the latest auctions, the total spectrum put up
for bidding was 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.
Another 5 MHz was in the 2,100 MHz band for 3G services.
A
reserve price of Rs.3,423 crore per MHz was fixed for 800 MHz frequency,
Rs.3,399 crore for 900 MHz band and Rs.1,425 crore for the 1,800 MHz
band. The government also fixed a reserve price of Rs.3,511 crore per
MHz for the frequency for 3G spectrum.
Analysts were worried over the impact of the high bid price on the industry and customers.
"The
whole auction was designed by the government to extract maximum
revenues from the operators. As a result, the industry is going to face
financial needs," Rajan S. Mathews, director general of the
representative body, Cellular Operators' Association of India, told
IANS.
Pointing to a financial indicator for the industry,
analysts quoted GSMA's research body and said while the bidding in India
was at global levels, the average revenue per user was already low for
Indian operators at $2.55, against $17.65 for Germany, $29.30 for the
Netherlands and $28.52 for Britain.
"The spectrum auction outgo
will impact on the rollout and quality of telecom network. In this
competitive environment, operators will find it difficult to raise data
or voice tariffs in the immediate term," said Arpita P. Agarwal, telecom
leader for PriceWaterhouseCoopers.