Auction completed 24 bidding rounds till Saturday with spectrum in 900 MHz being the most sought after by the telcos
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. K 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.
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