Telecom spectrum auction: 63% unsold; sale fetches Centre Rs 77,815 crore

By: |
March 3, 2021 4:00 AM

The government will receive an upfront amount of around Rs 27,000 crore from the operators — Rs 20,000 crore in FY21 and the remaining Rs 7,000 crore in FY22 when some spectrum would be made available.

However, from objective accounts, what was sold was far less than what was put up for sale.However, from objective accounts, what was sold was far less than what was put up for sale.

Auctions for telecom airways concluded on Tuesday with operators committing to buy a total of 855.60 MHz of spectrum worth Rs 77,814.80 crore. The auctions were completed in the shortest time since the process started in 2010.

The government will receive an upfront amount of around Rs 27,000 crore from the operators — Rs 20,000 crore in FY21 and the remaining Rs 7,000 crore in FY22 when some spectrum would be made available.

The government put up a brave front, saying the outcome was satisfactory given the pandemic and financial position of the industry and that the revenues were higher than its internal estimate of around Rs 45,000 crore.

However, from objective accounts, what was sold was far less than what was put up for sale.

Consider the numbers. A total 2,308 MHz of spectrum was put on auction which, at the reserve price, was worth Rs 3.92 lakh crore. This means that only 37% of airwaves were sold and two bands, 700 MHz and 2500 MHz, drew a blank. The 700 MHz had drawn a blank even in 2016 due to the high reserve price and the government now has no option but to write to the Telecom Regulatory Authority of India (Trai) to reduce the price.

Reliance Jio bought the maximum spectrum, 488.35 MHz worth Rs 57,122.65 crore and will pay Rs 19,939 crore upfront. Bharti Airtel was next with 355.45 MHz for Rs 18,698.75 crore and will pay around Rs 7,000 crore upfront. Vodafone Idea bought the least, 11.80 MHz for a total amount of `1,993.40 crore.

The spectrum bought and the amounts committed are on expected lines as the maximum amount of spectrum coming up for renewal, later during the year, belongs to Jio. Also, Vodafone Idea being financially weak had submitted the lowest earnest money deposit.

Operators need to pay 25% of the total bid amount for spectrum below 1 GHz 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.

In terms of mix, of the total 488.35 MHz spectrum bought by Jio, 74.60 MHz was in the 1800 MHz band, and 280 MHz was in the 2300 MHz band.

Of the total 355.45 MHz bought by Bharti, the mix was as follows: 48.85 MHz in the 800 and 900 MHz bands; 86.6 MHz in the 2100 and 1800 MHz bands; and 220 MHz in the 2300 MHz band.

Trai had in August 2018 recommended the reserve price for these auctions. While this was considerably lower than that fixed for the 2016 auctions, it was still perceived by the industry to be on the higher side. The government had written to Trai to consider lowering the price further but the regulator did not oblige.

In the premium 4G spectrum (700 MHz), Trai had reduced the reserve price by 43% compared with the 2016 auctions, at `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. This was seen as 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.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Apple Store goes down ahead of ‘Spring Loaded’ iPad Pro event: How to watch live, other details
2Y Combinator-backed Cashfree to enable 3 million small merchants on Dukaan’s platform accept e-payments
3Facebook to launch Clubhouse-style live audio rooms, direct podcast playback also incoming