"Auction has started. There are excess demand in 900 Mhz band and we expect the momentum to continue," a DoT official said.
On second day of auction, telecom companies put in bids worth a total of about Rs 45,000 crore that brings hope for the government to curb fiscal deficit. The fiscal deficit at Rs 5.16 lakh crore has crossed 95 per cent of budget target in the first nine months of 2013-14.
Now, even if bidders opt to pay the final auction price in instalments, the government will get at least Rs 11,790 crore, exceeding the target of collecting Rs 11,343 crore in upfront payments.
3G auction in 2010 lasted for 34 days, broadband wireless airwaves ended in 16 days while 2G auction in November ended in two days and CDMA auction in March concluded the same day.
It is the biggest spectrum auction being conducted by the government with about 385 megahertz of airwaves in 1800 Mhz band and 46 MHz of airwaves frequencies in premium 900 Mhz band being put on sale.
Telecom Minister Kapil Sibal has attributed demand of airwaves to rationalisation of base price which was about 7 times more than the price of Rs 1,658 crore at which telecom companies were given pan-India permits between 2001 to 2008.
"If you have an irrational reserve price, the market will not be attractive. I have been saying that. Now people should realise how irrational it was at that point in time for media and everybody to shout that the government is losing revenue," Sibal had said on Tuesday.
The government set a pan-India rate of Rs 1,765 crore per MHz as the start price for spectrum in the 1800 MHz band, which is about 26 per cent lower than the base rate in the March 2013 sale, where there were no takers for GSM airwaves. For the 900 MHz band, it approved a rate that is about 53 per cent lower than the March auction price.
The Telecom Regulatory Authority of India had recommended a minimum price of Rs 18,000 crore for 5 MHz of pan-India spectrum in the 2012 auction, Sibal had said at the time.
This followed the Supreme Court order of February 2012, asking for procedure to be followed in 3G auction.
However, even after the government cut the recommended reserve price to Rs 14,000 crore, the November 2012 auction ended in two days, with bids of about Rs 9,407 crore received for airwaves worth Rs 28,000 crore.
It is necessary for Vodafone to get spectrum in Delhi, Mumbai and Kolkata; for Bharti Airtel in Delhi and Mumbai for continuing operations because their licences are expiring in November 2014.