After the initial euphoria over bidding for frequencies to operate FM radio stations, bidding seems to have slowed down in the phase-3 auctions which entered their 17th day on Wednesday.
At the end of Wednesday, the government received bids for operating radio stations in 29 towns, down from 31 towns on Tuesday, auction data showed. Bidders had evinced interest for 35 towns until Monday.
Bidders are now keen on operating radio stations in metropolitan cities and tier-2 towns, a senior executive at a private FM radio station, who declined both his and his organisation’s name to named, told FE. This is because companies cannot make money by selling advertising on radio in much smaller places, making their ventures unviable, he said.
Bidding prices surged for frequencies in Delhi, Mumbai and Chennai. In Delhi, frequencies saw a price increase of 438% and in Mumbai, the price jumped 249%, IDFC Securities Research, a Mumbai-based brokerage firm said in a note on Wednesday. For Chennai, the prices were at 335% compared with its base price at the beginning of auctions, it added.
Interestingly, there has been an excess demand for frequencies in three cities namely — Varanasi, Nashik and Shillong.
The brokerage estimates the government could have collected at least Rs 1,116 at end of auctions on Wednesday, a 2.4% increase over the previous day.
Interestingly, real-estate firms such as Abhijit Realtors and Infrastructures, Abhir Buildcon and Nirmal Sagar Buildocon are bidding for frequencies to operate radio stations. Media conglomerates such as Bennett, Coleman and Co Ltd which owns Entertainment Network India (ENIL), HT Media, DB Corp, and Rajasthan Patrika Network, the are also in the fray.
IDFC expects Entertainment Network, which operates Radio Mirchi station, to emerge as a major bidder in the auctions by paying 40-50% share of the total bid amount. “Thus, its total payout (renewal plus new/ dual license acquisition) is currently estimated at Rs770-880 crore and is higher than our comfort zone of Rs 700 crore,” says the report. However, the company’s payout for migrating its permits at end of Wednesday largely remained flat at Rs. 320 crores, as compared to a day earlier.