Spectrum auction has received bids worth Rs 63,000 crore so far on the fourth day today for around 40 per cent of mobile frequencies put up for sale but telecom operators continued to ignore highly priced 4G radiowaves in 700 Mhz and 900 Mhz bands.
“Bids worth about Rs 63,000 crore have been received till the end of 19th round for 950 Mhz spectrum out of total 2,354.55 Mhz put for auction,” an official source told PTI.
Seven telecom companies — Bharti Airtel, Vodafone, Idea Cellular, Reliance Jio, Aircel, Reliance Communications and Tata Teleservices — are in the fray for acquiring 3G and 4G spectrum, crucial for maintaining competitive edge in the market and offering next generation services in the world’s second-largest telecom market.
The bidding activity is taking place only in few circles.
The much-hyped spectrum auction crawled on the third day yesterday and received total commitments of Rs 60,969 crore for about 38 per cent of total spectrum put for auction.
Sources said there is no demand yet for frequencies in 700 MHz and 900 MHz bands while bidding interest continues to be largely around 1800 MHz and 2300 MHz that can be used by operators to provide 4G services.
The debt ridden telecom industry has been cautious in this auction and filling its coffer with low priced spectrum that will help them in improving mobile service quality.
As per rating agency ICRA, the consolidated debt level of the industry stood at around Rs 3,80,000 crore in December 2015 against Rs 2,90,000 crore in March 2014.
Industry has shown interest in 1800 Mhz (2G/4G) band, 2100 Mhz (3G/4G) band, 2500 Mhz (4G) band, 2300 Mhz (4G) and 800 Mhz (2G/4G).
As much as 2,354.55 MHz of frequencies valued at Rs 5.63 lakh crore at base price have been put up for auction across seven bands.
The Finance Ministry in the Budget pegged the revenue target at Rs 98,995 crore from the telecom space. This included Rs 64,000 crore from the auction.
The premium 700 MHz band alone has the potential to fetch bids worth over Rs 4 lakh crore if the entire spectrum in this band is sold at the base price. However, at a reserve or base price of Rs 11,485 crore per MHz, it is considered to be priced very expensive in spite of its inherent advantages in terms of propagation ability and potential savings.
The government has fixed a pan-India reserve price of Rs 2,873 crore per Mhz for spectrum in 1,800 MHz band; Rs 3,341 crore for 900 MHz; Rs 5,819 crore for 800 MHz; Rs 3,746 crore for 2,100 MHz; Rs 11,485 crore for 700 MHz and Rs 817 crore each for 2,300 MHz and 2,500 MHz bands.
The higher the frequency, the lower is its pricing as coverage and efficiency tapers with increase in spectrum band value.