Spectrum sale: Government gets bids for over Rs 71k crore – Times of India

NEW DELHI: The government was assured of the second highest haul from spectrum auctions as it got bids worth Rs 77,146 crore on the opening day of the mobile airwave sale that saw participation from Reliance Jio, Bharti Airtel, and Vodafone Idea. In all likelihood, the auctions may come to a close on Tuesday with companies taking a clear position on their purchase, sources in the telecom ministry said.
The total revenues that the exchequer may earn this fiscal through upfront payment requirements will be around Rs 12,000-13,000 crore, communications and IT Minister Ravi Shankar Prasad said, while calling the auctions satisfactory in their outcome. The money will come handy at a time when the government is looking to raise resources.
The financially-stretched telecom companies have been mainly buying spectrum to make up for the expiry of some of their mobile holdings, but decided to stay away from any bids in the lucrative 700 MHz band, which they had dubbed as “highly expensive”. Even the 2500 MHz band did not get a bid on Day 1.
The biggest interest was in the 800 MHz band, which will be contribute nearly 50% to the sale kitty so far, telecom secretary Anshu Prakash said.
The highest amount that the government has fetched from spectrum auctions historically was in March 2015 where it had managed a record revenue of Rs 1.1 lakh crore amidst fierce competition between Jio (that started services more than a year later in September 2016), Airtel, and Vodafone India and Idea Cellular (the last two were still to merge into a single entity).
Prasad appeared satisfied with the first day kitty. “We had estimated that the bids (for the spectrum) would be around Rs 45,000 crore. But it’s a matter of assurance that they went up to as much as Rs 77,146 crore. Today’s bidding represents a sale of 37% of the total spectrum that was put for auction, and 19% in terms of the value at reserve price,” he said.
The government had put for sale a total of 2308.80 MHz of spectrum, out of which it has received bids for 849.20 MHz so far. At reserve price, the value of the spectrum – auctioned across 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz – stands at nearly Rs 4 lakh crore.
The government belives that companies may buy only “essential spectrum”, while saving funds for participation in the 5G spectrum sale where they would look at aggressive bidding.
The present spectrum that they will win will be valid for 20 years, and the government will charge 25% as upfront fee in the 700 MHz, 800 MHz and 900 MHz bands, while charging 50% on the higher frequencies. The balance amount will be payable in 16 equated annual instalments after a moratorium of two years, as per the telecom department’s condition.
According to Prakash, around 65% of the total spectrum in 800 MHz got sold, and the same was 38% in 900 MHz, 41% in 1800 MHz, 9% in 2100 MHz and 89% in 2300 MHz.