Spectrum auction has received bids worth Rs. 63,000 crores so far on the fourth day on Wednesday for around 40 percent of mobile frequencies put up for sale but telecom operators continued to ignore highly priced 4G radiowaves in 700MHz and 900MHz bands.
“Bids worth about Rs. 63,000 crores have been received till the end of 19th round for 950MHz spectrum out of total 2354.55MHz put for auction,” an official source told PTI.
Seven telecom companies – Bharti Airtel, Vodafone, Idea Cellular, Reliance Jio, Aircel, Reliance Communications and Tata Teleservices – are in the fray for acquiring 3G and 4G spectrum, crucial for maintaining competitive edge in the market and offering next generation services in the world’s second-largest telecom market.
The bidding activity is taking place only in few circles. The much-hyped spectrum auction crawled on the third day yesterday and received total commitments of Rs. 60,969 crores for about 38 percent of total spectrum put for auction.
Sources said there is no demand yet for frequencies in 700MHz and 900MHz bands while bidding interest continues to be largely around 1800MHz and 2300MHz that can be used by operators to provide 4G services.
The debt ridden telecom industry has been cautious in this auction and filling its coffer with low priced spectrum that will help them in improving mobile service quality.
As per rating agency ICRA, the consolidated debt level of the industry stood at around Rs. 3,80,000 crores in December 2015 against Rs. 2,90,000 crores in March 2014.
Industry has shown interest in 1800MHz (2G/4G) band, 2100MHz (3G/4G) band, 2500MHz (4G) band, 2300MHz (4G) and 800MHz (2G/4G).
As much as 2,354.55MHz of frequencies valued at Rs. 5.63 lakh crores at base price have been put up for auction across seven bands.
The Finance Ministry in the Budget pegged the revenue target at Rs. 98,995 crores from the telecom space. This included Rs. 64,000 crores from the auction.
The premium 700MHz band alone has the potential to fetch bids worth over Rs. 4 lakh crores if the entire spectrum in this band is sold at the base price. However, at a reserve or base price of Rs. 11,485 crores per MHz, it is considered to be priced very expensive in spite of its inherent advantages in terms of propagation ability and potential savings.
The government has fixed a pan-India reserve price of Rs. 2,873 crores perMHz for spectrum in 1800MHz band; Rs. 3,341 crores for 900MHz; Rs. 5,819 crores for 800MHz; Rs. 3,746 crores for 2100MHz; Rs. 11,485 crores for 700MHz and Rs. 817 crores each for 2300MHz and 2500MHz bands.
The higher the frequency, the lower is its pricing as coverage and efficiency tapers with increase in spectrum band value.