In the more efficient 900 MHz band, competition was limited to Bharti and Vodafone in Mumbai and Kolkata circles, while in Delhi, Idea Cellular emerged as the third player, buying 5 MHz. The government earned a total of Rs 23,589.62 crore from this band, which can be used to provide both voice and high-speed data services.
The 1800 MHz band spectrum in the three metros Delhi, Kolkata and Mumbai was won by Bharti, Vodafone and Reliance Jio. Idea Cellular became the fourth player in Delhi and Mumbai, while Reliance Communications was the fifth player in Mumbai. Total government earnings from this band is around Rs 37,572 crore, since only 80% of the total 385 MHz of spectrum put up for sale was bought.
Reliance Jio bought 1800 MHz spectrum in 14 circles including Gujarat, Maharashtra and Assam. All these circles have seen intense bidding.
This fiscal, the government will earn around Rs 18,296.36 crore if all winning operators opt for the deferred payment plan which entails an upfront payment of 33% of total price in 1,800 MHz (25% in 900 MHz) and the rest payable in 10 equal installments after a moratorium of two years.
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 usage charge and USO funds, said MF Farooqui, secretary, department of telecom (DoT). He added that the one-time spectrum levy of around Rs 10,000 crore which is stuck in legal tangles has been made good by the high auction proceeds.
Bharti Airtel was able to buy 900 MHz band spectrum in the Mumbai circle where it did not have any spectrum in this band. It will make an upfront payment of Rs 5,425 crore, with the balance to be paid in 10 annual instalments of Rs 1,310 crore each, commencing two years from now.
Future auctions should ensure that more spectrum in the 900 MHz band is secured from other agencies and operators who are grossly under-utilising this important spectrum band, said Gopal Vittal, joint MD & CEO India, Bharti Airtel.
Vodafone, which retained its total 900 MHz spectrum holding spread over Delhi, Mumbai and Kolkata has spent Rs 19,600 crore to buy entire spectrum holdings in both 1,800 MHz and 900 MHz bands. It bought 1,800 MHz spectrum in 11 circles including the three metros, Gujarat, Karnataka and Kerala.
Marten Pieters, managing director & CEO, Vodafone India said: We are pleased to have secured our business for the next 20 years in three of our most important circles by buying enough spectrum to continue our successful journey. We have also opened the door to the next generation of mobile technology 4G by acquiring 1,800 MHz spectrum in the places where we expect this market to take off first.
Meanwhile, the industry has sought rationalisation of spectrum usage charge and USO funds from the government to compensate for the high cost of acquiring spectrum. In order to help the industry overcome this huge financial burden, the government should address the high tax/levy structure on the industry. We would urge the government to reduce the SUC and the USOF levy to 1% to provide some relief to the telcos,said Rajan S Mathews, director general, COAI.
However, analysts do not expect a return of the high tariff regime. The overall outcome of the higher input cost should have been increase in tariff, however, due to intense competition, it is unlikely to get passed on to the consumer, said Hemant Joshi, partner, Deloitte Haskins & Sells.