Spectrum Auction 2016: Bids Worth Rs. 53,531 Crores Placed Across Bands on Day 1

India's largest-ever spectrum auction kicked off on Saturday with major telecom operators placing bids worth Rs. 53,531 crores across bands, even as the premium 700MHz and 900MHz frequencies did not find any buyer. As much as 2,354.55 megahertz of frequencies are being put up for auction in seven bands valued at Rs. 5.63 lakh crores at base price.
The airwaves auction Saturday saw total bids of worth around Rs. 53,531 crores after five rounds, official sources said. The spectrum auction, where seven telecom companies including Bharti Airtel, Vodafone, Idea Cellular and Reliance Jio are in fray, will resume on Monday. The other telecom players in the fray are Aircel, Reliance Communications and Tata Teleservices. Telecom Secretary J S Deepak had told PTI Friday that after this auction the "problem of spectrum scarcity affecting quality of service will be history". He had also advised operators to "tank up" the radiowaves to bridge shortfall in their holdings as the next such sale may not happen for "quite some time".

According to data released by the Department of Telecom, five bidding rounds took place on Saturday with operators showing more interest in 1800MHz band - a frequency that can be used for delivering 2G/4G services. Operators also placed bids for spectrum in 2100MHz(3G/4G) band, 2500MHz (4G) band, 2300MHz (4G) and 800MHz(2G/4G) bands too. Maximum action was seen in 1800MHz band - earlier known as 2G spectrum - with bidding in 19 of 22 telecom circles including Delhi, Mumbai, Kolkata, Gujarat and UP (East and West).

Telecom operators are in the race to arm themselves with spectrum to maintain competitive edge in providing quality and next generation mobile services to consumers in the world's second largest telecom market. The 2100MHz used for 3G services saw demand in 9 out of 22 telecom circles including Delhi, Rajasthan, Bihar and UP East. The spectrum band of 2,300MHz and 2500MHz, which went under the hammer after six years, also witnessed demand in various circles. The 800MHz frequency saw activity in circles of Gujarat, Punjab, UP (East) and Rajasthan.

The premium 700MHz band is to be auctioned at a reserve or base price of Rs. 11,485 crores per MHz. The cost of delivering mobile services in this band is estimated to be around 70 percent lower than 2100MHz used for providing 3G services. A company interested in buying spectrum in 700MHz band will need to shell out a minimum of Rs. 57,425 crores for a block of 5MHz on a pan-India basis. This band alone has the potential to fetch bids worth over Rs. 4 lakh crores.

However, there were no interest shown by operators in this band on the first day of auction. In 2015, mobile airwaves auction attracted bids worth around Rs. 60,000 crores after six rounds of bidding on Day 1 against the government's expectation to raise over Rs. 82,000 crores from that auction. The auction in 2015, which closed after 19 days, fetched the government around Rs. 1.1 lakh crores.