After 10 days of intense bidding, eight telecom companies, including Bharti Airtel and Vodafone India, on Thursday, bought spectrum worth a total of Rs.61,162.22 crore against the government’s estimate of Rs.47,933 crore.
The Finance Ministry will now get revenues to the tune of Rs.18,296 crore this fiscal from the auction against the initial projection of Rs.11,340 crore.
The value of the premium 900 MHz band spectrum, available only in three metro circles of Delhi, Mumbai and Kolkata, stood at Rs.23,589.62 crore (85 per cent higher than the value of the reserve price). Here, Bharti Airtel and Vodafone India, whose licences are expiring this year, managed to get the desired quantity of radio waves to ensure uninterrupted services to their customers.
In the 1800 MHz band, radio waves available in all 22 telecom circles, the net value was put at Rs.37,572.60 crore . All of 46 MHz spectrum in the 900 MHz band was sold, but 78 blocks of the 390 MHz spectrum in the 1800 MHz band remained unsold. Here, the top three circles in terms of net value are: Delhi (Rs.7,644 crore), Mumbai (Rs.6,364 crore) and Maharashtra (Rs.4,064 crore). While Assam surprised all by clocking the highest value for spectrum in percentage terms — Rs.411.54 crore, which is 515 per cent over its reserve price of Rs.79.80 crore.
Terming the auction as ‘extremely successful’, Communications and IT Minister Kapil Sibal told journalists: “The total revenue that will come to the government is Rs.61,162.22 crore…To that extent, particular auction has been extremely successful.” When asked whether high valuation of spectrum would lead to hike in mobile tariffs, he said: “Auction will really be successful if we are able to provide efficient service to consumers…The ultimate objective if any auction which has to provide service is that the service must be provided efficiently and at a relatively affordable price. We hope the tariffs will remain reasonable in the years to come.”
Stating that he did not foresee any impact on tariffs, Telecom Secretary M. F. Farooqui said companies would have factored in all aspects before bidding for spectrum. “Market sentiment, economic situation and clarity in regulatory framework impact (spectrum) prices...We only provided transparent environment. Companies know their business better…If they have bid, they must have calculated the value of spectrum,” he said, and added that the telecom sector was poised for another round of growth where data usage would see a spurt.
Cos seek cut in levies
Though successful companies did not talk about any immediate increase in tariffs, they rued about ‘unreasonable’ reserve prices and demanded cut in levies imposed on telecom service providers.
Stating that higher spectrum prices could impact the objectives of the telecom policy related to rural penetration, broadband for all, internet access, Rajan S. Mathews, Director-General, Cellular Operators Association of India (COAI), which represents GSM operators, said: “It remains to be seen if the operators will have the financial resources to invest in networks and marketing after bearing the high spectrum costs…To help the industry overcome this huge financial burden, the government should address the high tax/levy structure on the industry.”
