It’s been eight days since the spectrum auctions began and till the end of the seventh day the government had mopped up around R96,000 crore from sale of airwaves in the bands of 800, 900, 1800 and 2100 MHz. The committed revenues to the Centre by the telcos have already exceeded the amount of R82,000 crore which it would have got at the base price and it is likely that the final amount would be higher than the R1 lakh crore expected by the government. However, as the chart shows, the inherent danger or flaw of the auction design is quite visible.
While spectrum in varying quantities has been put up for sale across four bands, it is the 900 MHz band which has seen the maximum rise above the reserve price. As on Wednesday (day 7), the increase over the reserve price in 900 MHz stood at 76.8% compared to 10.6% in 1800 MHz; 35.7% in 800 MHz and 4.3% in 2100 MHz. The reason is simple: Since in 900 MHz the spectrum on offer is the amount currently held by the telcos, they need to win it back to maintain continuity of their business and safeguard investments.
Since this is known to industry rivals, any non-serious player is in a position to push up the final price.
