Spectrum auction: Govt gets bids worth Rs 77,000 crore on Day 1

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March 2, 2021 5:45 AM

Based on Monday's total bids worth Rs 77,146 crore, the government would receive an upfront amount of about Rs 13,000 crore. Operators need to pay 25% of the total bid amount for spectrum below 1Ghz like 800 MHz, 900 MHz, and 50% for above 1 GHz like 2300 MHz, 1800 MHz. The balance can be paid in instalments spread over 16 years after a two-year moratorium.

Reliance Jio bought Rs 57,122.65 crore worth of spectrum while Vodafone Idea Ltd picked Rs 1,993.40 crore worth of airwaves.Reliance Jio bought Rs 57,122.65 crore worth of spectrum while Vodafone Idea Ltd picked Rs 1,993.40 crore worth of airwaves.

Telecom operators put in bids worth Rs 77,146 crore at the spectrum auctions that started on Monday, communications and IT minister Ravi Shankar Prasad said. Prasad said the auctions are expected to be completed by Tuesday afternoon and given the pandemic and the financial health of the telecom sector, the response has been good. A government statement said the pre-bid estimate was Rs 45,000 crore which has been exceeded on Day 1.
As expected, none of the operators bid for the premium 4G band, 700 MHz, where the reserve price is very high or for the 2500 MHz band.

Going by the trend on Day 1 the total bids, on conclusion, are likely to be in the range of Rs 85,000-90,000 crore.
It is apparent that around 75% of the total spectrum put on sale would remain unsold. As expected, the 800 MHz and 2300 MHz are attracting the maximum interest. In 800 MHz, Reliance Jio would have shown the most interest as the bulk of its spectrum in this band is coming up for renewal later this year.

Based on Monday’s total bids worth Rs 77,146 crore, the government would receive an upfront amount of about Rs 13,000 crore. Operators need to pay 25% of the total bid amount for spectrum below 1Ghz like 800 MHz, 900 MHz, and 50% for above 1 GHz like 2300 MHz, 1800 MHz. The balance can be paid in instalments spread over 16 years after a two-year moratorium.

The government said if the 700 Mhz and 2500 Mhz bands which did not see any bids are excluded, around 60% spectrum has been bid for in the remaining five bands of 800 MHz, 900 Mhz, 1800 MHz, 2100 MHz and 2300 MHz.
Monday saw four rounds of bidding with activity levels of 80-90%.

Telecom secretary Anshu Prakash said 2300 MHz seems to be the most sought after band with about 89% of spectrum being bid for. Apart from that, 65% airwaves in 800 Mhz and around 35% in 900 MHz band have received bids.

A total of 2,250 MHz of spectrum has been put on auction which at reserve price is worth Rs 3.92 lakh crore.
The Telecom Regulatory Authority of India (Trai) had in August 2018 recommended the reserve price for these auctions, which though considerably lower than what was fixed for the 2016 auctions, was still seen on the higher side.

In the premium 4G spectrum (700 MHz), Trai had reduced the reserve price by 43% compared with the 2016 auctions, at Rs 6,568 crore per MHz, for a pan-India 5 MHz block, for which operators would have had to shell out Rs 32,840 crore.

In the 2016 auctions, the government had mopped a total amount of Rs 65,789 crore, 4% over the reserve price, from the operators who participated in the bidding. However, this was a lukewarm response as only 965 MHz spectrum got sold against a total of 2,353 MHz put up on sale, meaning only 40% got sold.

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