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Telecom spectrum auction ends; government to get $17.6B

By PTI
25 March, 2015

Government raised a record Rs 109,874 crore in the country’s biggest and the fiercest auction of telecom spectrum that ended today, triggering fears of hike in call and data rates.

Incumbents Airtel and Vodafone bid aggressively to protect their businesses as new players like Reliance Jio participated in the auction that lasted 19 days and saw 115 rounds of bidding among eight operators. In two of the spectrum bands, prices jumped by over two-fold in some circles.

“Today spectrum auction has concluded at Rs 1,09,874 crore. This is highest ever in history of India. The spectrum auction conducted in 2010 brought about Rs 1,06,000 crore which included Rs 30,000 crore payment from BSNL and MTNL.

This time all amount is non-BSNL, non-MTNL money,” Telecom Minister Ravi Shankar Prasad said.

Names of the winners, however, have not been disclosed due to court orders. The Supreme Court may tomorrow rule on multiple cases questioning auction guidelines and criteria.

“The auction has ended,” a top official said.

Sale of airwaves in four bands got bids worth Rs 1,09,874 crore even as 11 per cent spectrum went unsold. At the base price, the value of spectrum in the auction was worth about Rs 82,395 crore.

The fierce bidding is likely to lead to rise in call, SMS and data charges as operators pass on the cost of spectrum to consumers.

“The auction was designed to extract maximum from telecom operators else why would someone create scarcity of spectrum.

Financial and cost structure of industry has been completely altered. Consequently tariff will have to be increased to meet commitment to government,” industry body COAI Director General Rajan S Mathews told PTI.

Depending on the band, carriers will have to pay as much as 33 per cent of their final bid within 10 days of the auction’s conclusion and the rest in 10 annual instalments starting in 2017. The permits will be valid for 20 years.

Former Secretary General of industry body AUSPI, SC Khanna, said, “All big companies, they are debt-ridden. If price of spectrum has gone up, which is the raw material for operators, the only choice they have is to marginally hike tariffs.” 

He added that this would not have a major impact since “subscribers are now accustomed to these changes like that in case of petrol”.

The auction included airwaves held by nine licences of Idea Cellular, seven each of Reliance Telecom and Vodafone and six permits of Bharti Airtel that were expiring in 2015-16.

These airwaves mostly included frequencies in 900 Mhz band and 1800 Mhz band.

Government also auctioned airwaves in 1800 Mhz band that remained unsold in 2014, and 800 Mhz or CDMA band frequencies that were left after sale in 2013.

A total of 380.75 MHz of spectrum was put on sale in the premium 900 MHz band, 1,800 MHz and 800 MHz, while 5 MHz was up for bidding in the 2,100 MHz band, used for 3G mobile services, across 17 out of 22 telecom.

Almost 40 per cent of the spectrum at the sale was in the 900 megahertz band, one of the most coveted for voice calls because signals travel farther and require fewer towers to be built.

As per auction document, in case of deferred payment option, telecom operators are required to pay an upfront payment of 33 per cent in case of 2100 MHz, 1800 Mhz bands and 25 per cent for 900 MHz and 800 MHz bands within 10 calendar days of the close of auction.

The winners will pay the rest of the amount over a period of 12 years — 2 years moratorium and then 10 yearly installments.

While Idea, Airtel, Vodafone and Reliance Communications participated in the auction mainly to defend their existing spectrum holding, Reliance Jio, Tata Teleservices, Telewings (Uninor) and Aircel participated to buy additional spectrum.


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Telecom spectrum auction ends; government to get $17.6B

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