3G auction ends today

The 3G (third generation) spectrum auction is expected to close Thursday evening with an estimated Rs 50,000 crore going to the government kitty, including the matching bids from state-owned Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL).

Ballpark calculations suggest the government would raise around Rs 65,000 crore from the auction of 3G and BWA (broadband wireless access) spectrum together.

That’s double the Rs 35,000 crore target the finance ministry had set from the sale.

BWA bidding will start two days after the 3G auction concludes.
Proceeds from the auctions would help the exchequer bridge the steep fiscal deficit.

At the end of 22 days and 128 rounds of 3G bidding, the highest pan-India bid price touched Rs 11,047.04 crore, which is 215.62% higher than the reserve price of Rs 3,500 crore.

The estimated 3G revenue raised so far, taking into account BSNL and MTNL proceeds, is Rs 44,500 crore, which is 27% cent more than the total target for 3G and BWA taken together.

According to the Department of Telecommunications (DoT), the activity requirement will be set to 100% in the clock round 132.

With 128 rounds already done, 100% 3G activity is expected on Thursday. An industry source explained that if there is any positive demand even after round 132, bids may continue for sometime (maybe a couple of more rounds). Otherwise, the 3G auction will end after round 132.

Another source pointed out that there may be some action in C circle on Thursday as 3G auction draws to a close. In some of the C circle regions like Jammu and Kashmir and Himachal Pradesh, no bidding has taken place so far.   

The 3G spectrum auction, which began on April 9, has witnessed intense bidding since then. Mumbai is on top of the scorecard with the highest bid price of Rs 1,909.18 crore, which is 496.6% more than the reserve price of any A circle region at Rs 320 crore. Delhi is a close second with the bid price of Rs 1,845.11 crore, which is 476.5% more than the reserve price.

In B Circle, the highest bid has gone to Uttar Pradesh West at Rs 331.96 crore, which is 176.6% over the reserve price of Rs 120 crore for the circle.

C Circle, which has witnessed very weak bidding, has Bihar on top with the bid price of Rs 39.09 crore, which is 30.3% more than the reserve price of Rs 30 crore for this circle.

There are indications that most telcos would cherry-pick rather than bid pan-India. And most telcos with deep pockets are likely to focus on high-value A Circle centres and metros such as Delhi and Mumbai.

The reserve price set by the government for pan-India 3G spectrum is Rs 3,500 crore for an operator and Rs 1,750 crore for BWA.

The auction process would close once all the circles achieve an equilibrium, that is the number of slots available equal the number of bidders.

The 3G auction would facilitate high-speed mobile services in the country. It is a simultaneous auction of 22 service areas over a secure website. The auction has multiple rounds, and could be spread over several weeks.

Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices and Aircel are bidding for all-India 3G spectrum. Etisalat, S Tel and Videocon Telecommunications are bidding only for some circles.