Day 9: Total spectrum bid value remain at over Rs 1 lakh crore

Saturday, 14 March 2015 - 6:30am IST | Place: New Delhi | Agency: dna | From the print edition

On the ninth day of the spectrum auction, the total bid value remained over Rs 1 lakh crore as telecom companies (telcos) went after airwaves in the 800 Mega Hertz (MHz) band as they look to cash in from data consumption explosion projected by internet survey firms.
After 55 rounds of bidding, the government's provisional revenue earning on Friday on allocation of 86% of the 465 MHz spectrum in four bands put on the block was over Rs 1 lakh crore. This figure is very close to the record revenue of Rs 1.06 lakh crore earned by it in 2010.
The auction continued to see furious action in the 800 MHz band for the third day in a row. The demand for airwaves in this band in Andhra Pradesh (AP) circle on Friday saw a huge jump of 15% to Rs 541 crore per block from Rs 471 crore per block a day earlier.
G Krishna Kumar, Bangalore-based telecom consultant, said fierce bidding for airwaves in AP circle could be because it is one to the top five states in the country in terms of GDP and also one of the IT capitals.
Curiously, even Odisha and Madhya Pradesh (MP) saw some intense bidding on Friday with the price per block shooting up by 19% and 10% respectively. In Odisha, it moved up to Rs 22.32 crore per block from Rs 18.75 crore per block and in MP to Rs 266.50 crore per block from Rs 243.90 crore per block.
Spectrum price in Delhi also jumped by around 1% from Rs 885.95 crore per block to Rs 903.74 crore per block. Beside these circles, prices in the rest of 800 MHz band circles seems to have stabilised.
Prices of 900 MHz band spectrum has, more or less, stabilised with marginal price rise in a few circles like Assam, Maharashtra, Northeast and West Bengal circles.
Friday also saw demand for 1,800 MHz with upward price movement in Haryana, Himachal Pradesh, Kolkata and Odisha.
In the 2,100 MHz band, there were no bidder in Mumbai, Delhi and AP circles due to prohibitive reserve price per block in these circles, which was as high as Rs 3,315 crore (Delhi) per block and Rs 3,245 crore (Mumbai) per block. In this band, there was a nominal price rise in Assam, Northeast, Rajasthan and UP (west).
Krishna Kumar said the lacklustre demand for 2,100 MHz could be because only one slot had been put up for sale at very high reserve price. He believes this band could see some spectrum left unsold at the end of the auction. He expects the auction to conclude in a few days.
The auction has eight participants including Bharti, Vodafone, Idea, Uninor, Aircel, Tata Tele, Reliance Communication and Reliance Jio. The government said since there was still some more spectrum left to be sold, the bidding will continue today.
 

Spectrum bidding set to top Rs 1 lakh crore

Monday, 9 March 2015 - 6:30am IST | Place: New Delhi | Agency: dna

Bidding for spectrum by the telecom operators reached Rs 86,000 crore on the fourth day of the auction, surpassing the government's revenue expectation of Rs 82,000 crore, the rate at which the reserve price was fixed in the four bands.
By Saturday, the auction, that began on Wednesday, completed 24 bidding rounds with spectrum in 900 MHz band being most sought after by the telecom companies. In this band, Madhya Pradesh saw aggressive bidding with an increase of 15% from Day 3 to Day 4. Similarly, UP (East) saw the price per block go up from Rs 77 crore to Rs 88 crore, an increase of 17% at the end of the clock round 24.
After three days of lukewarm response in the 800 MHz band, action picked up on Day 4 with some bidders jumping into the fray for blocks in circles like Andhra Pradesh, Gujarat and others. Apparently, bidding in the 800 MHz band was keenly contested. For example, in Mumbai, from Day 3 to Day 4, the price per block went up from Rs 576 crore to Rs 691 crore.
Even in the 1800 MHz band, bidding commenced for blocks in Kolkata and Northeast circles even as demand for 2,100 MHz remained subdued for the fourth day with bidding seen only by three bidders in three circles of Assam, Northeast and Rajasthan. There were no takers for the 1800 MHz in both UP (East) and UP (West).
Analysts believe aggressive bidding by telcos is likely to see their debt levels shoot up considerably. Standard & Poor's (S&P) expects it to jump 18-20% from the current levels. G Krishna Kumar, a Bangalore-based telecom professional estimates the auction to push up the debts of the operators by 30-40%.
He believes Idea could have bid more aggressively as the spectrum that contributes around 70% to its revenues will expire later this year. He feels both Airtel and Vodafone too could fiercely bid for airwaves as roughly 50% of their revenues are tied to the spectrum that are expiring this year.
According to him, the average revenue per minute (ARPM) in India is roughly 35 paisa. "This means after the current auction, the operators will ask subscribers to pay at least 15% more," estimates Krishna Kumar.
He said India had to do lot of catching up in the data service segment, where huge potential still remains untapped. "Data usage per customer in India is roughly 60 megabytes (MB) per month while it is 700MB in the US. It is expected to touch 2 gigabyte (GB) by 2017, thanks to 4G. There is a big catch-up to be done in India," he said.
The government has put up 465 MHz of airwaves on the block for sale in four bands including 800 MHz, 900 MHz, 1,800 MHz and 2,100 MHz. In all, eight telcos are taking part in the bidding constituting Bharti Airtel, Vodafone, Idea, Tata Tele, Uninor, Reliance Jio, Reliance Communication and Aircel.
A large quantum of spectrum put up for auction are currently being held by Airtel, Vodafone, Idea Cellular and Reliance Telecom. While their licences are set to expire in 2015-16, Idea's nine, Airtel's six and seven each of Vodafone and Reliance Telecom are coming up for renewal. The government had raked in Rs 62,162 crore from the last spectrum auction held in February 2014.

Spectrum auction kicks off with a bang; bidding tops Rs 60,000 crore

Thursday, 5 March 2015 - 6:10am IST | Place: New Delhi | Agency: dna | From the print edition

The latest round of spectrum auction in four bands kicked off with a bang on Wednesday with the first day bidding crossing a whopping Rs 60,000 crore. Aggressive bidding was seen in the 900 megahertz (MHz) band.
"Going by the quotations on the first day the response was better than expected," telecom secretary, Rakesh Garg said.
"It (the first day of the auction) went off well with the bidding already reaching Rs 60,000 crore. There was aggressive bidding in the 900 MHz band, which is fast spreading to 1800 MHz and 2100 MHz. The bidding for 800 MHz airwaves was also good," he said.
The auction saw eight companies participating in the bidding with 385.75 megahertz (MHz) of telecom spectrum in four bands put on the block. These were Bharti, Vodafone, Idea, Aircel, Tata Tele, Reliance Communications, Reliance Jio and Telewings, who have deposited a total of Rs 20,435 crore earnest money.
The high collection of earnest deposit was itself an indication of aggressive bidding. The total airwaves up for bidding include 103.75 MHz in the 800 MHz band, 177.8 MHz in 900 MHz band, 99.2 MHz in 1,800 MHz band and 5 MHz in 2,100 MHz band.
G Krishna Kumar, a telecom professional from Bangalore, said aggressive bidding for airwaves will further hit the already stretched balance sheets of telecom companies and will push up tariff as increased costs will be passed on to the consumers.
He said that with subscriber base for most telcos' voice services already having topped, they will chase subscribers for data services, where a huge potential still remained untapped.
"Going forward, data is going to be their priority. They will have to be clever in providing their data-plans in a way that there is growth in the segment," he said.
The initial estimates of revenues, based on the reserve prices set by the government, to be earned by the government from selling the airwaves in different bands have been pegged at Rs 80,000 crore to Rs 1 lakh crore.
This is the highest ever revenue collected in any auction till now and will help the current government to easily meet its fiscal deficit target of 4.1% of the GDP in this fiscal. In the last auction, which was held in February last year, the government raked in Rs 62,162 crore.
The auction is expected to carry on for several weeks, including Thursday, which is a public holiday. In the past too, bidding for spectrum has lasted for longs hours for weeks.
At the outset, the latest round of the auction was expected to be of fierce bidding with incumbents Bharti and Vodafone trying to garner as much spectrum as possible to keep their lead in the voice services market and expand the data services segment. Mukesh Ambani's Reliance Communications, which is yet to launch its services, is expected to up the competitive heat by going aggressively after more airwaves to take on established players.
Many of the telcos' licences will be coming up for renewal in 2015-16. These include nine of Idea, six of Airtel and seven each of Vodafone and Reliance.
Abiding the court order, this time the government will not be releasing information on individual companies or the winners of spectrum until the end of the auction.