After 115 rounds over 19 days, telecom companies bid Rs 1,10,000 crore for spectrum across four bands. That’s 1.79 times the reserve price for the country in the 800 MHz band, 1.95 times in 900 MHz, 1.16 times in 1800 MHz and 1.05 times in the 2100 MHz band.
The fear of aggressive bidding was the reason why the telecom regulator was in favour of postponing the auctions till there was more spectrum available. Though the defence ministry had cleared 15 MHz of 2100 MHz spectrum for a swap, the government did not include it in the current auction, nor did it announce spectrum trading guidelines that would have reduced the auction pressure.
Exact bid details will not be available till after the decision of the Supreme Court that is hearing a case on the auctions — the next hearing is later on Thursday — but estimates are Vodafone bid the highest at Rs 34,500 crore, followed by Idea Cellular at Rs 28,000 crore, Bharti Airtel Rs 27,500 core, Reliance Jio (RJio) Rs 11,000 crore and Reliance Communications (RCom) at Rs 2,300 crore. Compared with its revenues, Idea bid the most aggressively as it had the most to lose.
Sources said Bharti Airtel, Vodafone and Idea managed to win back most of their licences in the 900 MHz band that were expiring. This was critical since Idea got close to 80 per cent of its revenues from circles where the 900 MHz licences were expiring; the share was 55 per cent for Vodafone and around 36-38 per cent each for Bharti Airtel and RCom.
Not surprisingly, even before Reliance Jio entered the fray, competition in the 900 MHz band was fierce with more players in the fray than the number of spectrum slots available.
While winners now have to pay a fourth of the bid price within 10 days, as has been pointed out before, the industry simply does not earn enough to support the bids. With spectrum spends at roughly $47 billion so far, just servicing this — 10 per cent interest costs and 5 per cent amortisation — requires an Ebitda of over $7 billion compared with the current Ebitda of $6-6.5 billion. FE