Spectrum auction day 1: After five rounds, Rs 53,530 crore worth bids on government table

Operators show no interest in the premium 700 MHz band; 1800 MHz sees most demand.

By: ENS Economic Bureau | New Delhi | Published:October 2, 2016 2:15 am
spectrum auction, spectrum auction day 1, Reliance Jio, telecom spectrum auction, Bharti Airtel, Vodafone, Idea Cellular, spectrum auction, spectrum, tech news, technology At the end of the fifth round, 75 bids were placed for 1800 MHz spectrum in Mumbai circle, against 24 blocks being put up for sale.

Bids worth approximately Rs 53,530 crore were placed at end of the fifth round of bidding on the first day of 2016 edition, but proved to be ineffective in terms of bidding for the most premium 700 MHz band, which no interest from operators throughout the bidding process on Saturday. Major demand on Day 1 was witnessed in 1800 MHz and 2300 MHz bands.

This could mean bad news for the government as nearly 80 per cent of the spectrum put up for auction, in value terms, belongs to the 700 MHz frequency, which is considered most premium for rollout of 4G services as its propagation characteristics reduces the infrastructure costs for companies, while providing better indoor coverage.

The majority of activity on the first day was witnessed in the 1800 MHz band, which is also used to deploy 2G services apart from 4G, with the maximum bids by end of Round 5 being received for Mumbai circle with a provisional winning amount of Rs 69.60 crore per block, against its reserve price of Rs 59.60 crore. At the end of the fifth round, 75 bids were placed for 1800 MHz spectrum in Mumbai circle, against 24 blocks being put up for sale.

By the end of Round 5, nearly all the spectrum in the 2300 MHz band was sold off in the 16 circles it was put up for auction, with the exception of Bihar, Gujarat, and Kerala, which would have been kept up for grabs at a higher price in the next round due to demand being more than the available spectrum.

Operators tend to use airwaves in the 2300 MHz frequency to create capacity on their 4G network, because even though the band does not penetrate well indoors, its high frequency enables it to carry high loads of data usage. It is the first time that this band has been put up for sale after it was auctioned in 2010.

While all the seven bands put under the hammer — 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz — can be used to deploy 4G LTE services, operators have generally used the two aforementioned frequencies for 4G networks, thus indicating interest in augmenting the existing spectrum capacities.

The 900 MHz band, which is considered the best for deployment of voice services, also did not attract any demand at the end of Round 5, and the 2100 MHz band, which is used for 3G services saw demand in 9 out of 22 telecom service areas such as Delhi, Rajasthan, Bihar, and Uttar Pradesh (East). The 800 MHz band, which witnessed high demand last year, also saw some bidding this year in circles such as Gujarat, Punjab, Uttar Pradesh (East) and Rajasthan.

The telecom service providers participating in the auction — Bharti Airtel, Vodafone India, Reliance Jio Infocomm, Reliance Communications, Idea Cellular, Aircel and Tata Teleservices — have together deposited a total earnest money of Rs 14,653 crore.

Sources in the Department of Telecommunication (DoT), which has released this data, said that with the increased and focussed activity witnessed on day one of the auction, the possibility of an early end was high with the process likely to end before the upcoming midweek.