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Govt savours telecom treat
Spectrum bids fetch big bucks

New Delhi, Feb. 13: The government’s gamble to raise money by auctioning 2G spectrum paid off in spades as an intensely-fought auction yielded a combined bid of Rs 61,162.22 crore for radiowaves in the 900MHz and 1800MHz bands.

The Big Boys of telecom — Vodafone and Bharti Airtel — successfully fought off the challenge from their rivals as they bid huge bucks to protect their turf in the lucrative 900MHz band which was being auctioned for the first time.

Vodafone cornered 11MHz spectrum in the 900MHz band in Mumbai, up from the 8MHz it held earlier. It was also able to retain 5MHz in Delhi against the 8MHz it held earlier.

Bharti Airtel won 6MHz in Delhi against the 8MHz it held earlier in the 900MHz band and won 5MHz in Mumbai where it did not hold any radiowaves in the premium spectrum band.

Vodafone and Bharti split the 14MHz spectrum on offer in Calcutta equally, at 7MHz apiece.

Bharti Airtel and Vodafone will together pay around Rs 38,000 crore.

Vodafone alone bid Rs 19,600 crore for spectrum in the 900MHz band in Mumbai, Delhi and Calcutta and the 1800MHz band in 11 circles: Mumbai, Delhi, Calcutta, Karnataka, Kerala, Gujarat, UP (East), Rajasthan, Haryana, Andhra Pradesh and Punjab.

Bharti Airtel put in total bids worth Rs 18,530 crore for a total of 115MHz of spectrum in the 900MHz and 1800MHz bands.

Idea Cellular emerged as the third-most aggressive player by snapping up 5MHz in the 900MHz band in Delhi.

The big surprise was that Mukesh Ambani-owned Reliance Jio did not go flat out to wrest spectrum in the 900MHz band in the three metro circles, preferring to snap up spectrum in the 1800MHz band in 14 of the 22 circles.

Reliance Jio has radiowaves in the broadband wireless access (BWA) spectrum segment in all 22 circles that it won in the May 2010 auction.

The winning bidders will pay Rs 18,296.36 crore by March-end this year. Under the deferred payment mechanism, they need to pay upfront 33 per cent of their winning bid amount for 1,800MHz and 25 per cent of their bids for 900MHz radiowaves. The rest can be paid in 10 equal instalments after a moratorium of two years.

“The government is happy and we will see a smile on the face of the finance minister,” said minister for communications and information technology Kapil Sibal.

Eight telecom firms had bid for the radiowaves over a 10-day period. In May 2010, the government had raised Rs 67,718.95 crore from the auction of 3G radiowaves, or about 10 per cent more than what it raised in the current round. However, Delhi and Calcutta yielded higher bids in the current auction of 900MHz band radiowaves than the 3G auction in 2010.

In all, the government earned Rs 23,589.62 crore by re-farming spectrum in these cities for a further period of 20 years.

“Future auctions should ensure that more spectrum in the 900MHz band is secured from other agencies and the operators who are grossly underutilising this important spectrum band,” said Gopal Vittal, CEO India of Bharti Airtel.

Marten Pieters, managing director and CEO, Vodafone India, said: “We are pleased to have secured our business for the next 20 years in three of our most important circles.”

In the 1,800MHz band, Bharti, Vodafone and Reliance Jio won spectrum in the three metros of Delhi, Calcutta and Mumbai. However, 35 blocks of 200KHz size in Calcutta remained unsold at the end of the auction.

Idea Cellular emerged as the fourth player in Delhi and Mumbai, while Anil Ambani’s Reliance Communications emerged as the fifth player in Mumbai. Reliance Jio bought 1,800 MHz spectrum in 14 circles, including Gujarat, Maharashtra and Assam.

In the 1800MHz spectrum, the government managed to sell about 80 per cent of the 385MHz of spectrum it had put up for sale and was able to raise Rs 37,572 crore.

Assam witnessed very aggressive bidding in this auction with a winning bid of Rs 7.22 crore per 200KHz block, translating into a price of Rs 36.10 crore for 1MHz of spectrum. This was 421 per cent higher than the Rs 6.93 crore per 1MHz that was realised in the November 2012 auction.

“We will achieve our budgeted revenues of Rs 40,800 crore from the telecom sector for the fiscal. This includes the auction proceeds, licence fee, spectrum use charge and USO funds,” said M.F. Farooqui, secretary, department of telecom.

The radiowaves were put up for auction after the Supreme Court had ruled against spectrum allotted to mobile services through a state-selection process two years ago.

The government’s attempt to auction the spectrum, freed by the court-ordered cancellation of licences in November 2012 and March 2013, flopped as most bidders stayed away from the sales, complaining that the reserve prices were too high.

 
 
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