BWA auction garners twice Rs 15,000 cr target

Spectrum auction for broadband wireless access (BWA) has been set at 100% activity level after 11 days of bidding, indicating that the process is set to close over the next couple of days.

In the case of the recently concluded 3G (third generation) telecom spectrum auction, 100% activity was achieved after 23 days of bidding, and the process came to a close in 34 days.

Interestingly, the pan-India highest bid price in BWA was recorded at an impressive Rs 9,837.41 crore at 100% activity level, which is as much as 462.13% higher than the reserve price of Rs 1,750 crore. In comparison, the pan-India 3G bid price at 100% activity level was Rs 11,327.44 crore, just 223.6% higher than the 3G reserve price of Rs 3,500 crore.

If we were to look at the lucrative Delhi and Mumbai circles at 100% activity level, the BWA bid price is quite close to that in the case of 3G, even though there’s a big gap in the reserve price of the two.

Delhi’s provisional winning price at the end of round 82 of bidding, when auction was set at 100% activity, was Rs 1591.82 crore.

This is 894.8% higher than the reserve price of Rs 160 crore for BWA auction in the Delhi circle. In 3G, the highest bid price in Delhi was Rs 1,920 crore at 100% activity level, 500% higher than the reserve price of Rs 320 crore.

It’s the same story for Mumbai. The highest BWA price in Mumbai at 100% activity was Rs 1633.47 crore. This is 920.9% higher than the reserve price of Rs 160 crore. As for 3G, Mumbai fetched Rs 1986.69 crore at 100% activity level, 520.8% higher than the reserve price of Rs 320 crore.

In the case of wireless broadband auction, the government has already garnered a notional Rs 29,512.23 crore from two private slots and another reserved for state-owned BSNL/MTNL. The initial revenue target of the government from BWA auction was Rs 15,000 crore, but it has subsequently raised its expectation.

The industry estimates that BWA auction would fetch the Exchequer around Rs 40,000 crore. The government has already collected Rs 67,700 crore from 3G auction, which is expected to go a long way in bridging the steep fiscal deficit of the government.
The pan-India reserve price for BWA auction has been kept at Rs 1,750 crore for 22 circles — this is half the 3G spectrum base price at Rs 3500 crore.

But the fight in BWA is quite intense as there are just two spectrum slots to be won between 11 private players. In the case of 3G, there were 3 slots for 9 private players. Also, in BWA, two technologies—WiMax (worldwide interoperability for microwave access) and LTE (long term evolution)—are expected to compete with each other.

While in 3G an operator gets just two slots of 5 megahertz (MHz) each of spectrum, a wireless broadband winner will get one block of 20 MHz. BWA service is expected to give a boost to the broadband fortune of the country.