India's largest auction for spectrum that began on Friday turned out to be a low-key affair. While all leading players including Bharti Airtel, Reliance Communications Ltd (RCOM), Tata Teleservices, Vodafone Essar, Idea and Etisalat entered the foray to buy 3G spectrum, the bids have been barely above the reserve price.
The auction process began at 9.30 am and by 7.30 pm, five rounds were complete.
The bid price for pan-India 3G spectrum went up to Rs. 3,930 crore at the end of five rounds of bidding. This indicates that companies have not bid aggressively for 3G spectrum, given that the reserve price was Rs. 3,500 crore.
Besides, only in five circles — Mumbai, Maharashtra, Gujarat, Andhra Pradesh and Tamil Nadu — out of 22 on offer, there were more bidders than the slots available, according to information available on the department of telecommunications (DoT) website.
Delhi, one of the largest circles, had no excess demand at round 5 price of Rs. 373 crore.
"It seems that the government will not be able to raise the real value of spectrum due to entry barriers," said B.K. Syngal, former CMD, Tata Communications (formerly Videsh Sanchar Nigam Ltd).
"The government has failed to separate spectrum from licence and hence foreign operators could not participate."
The biding is expected to go on for a few more days. This is the first time that online auction will take place for spectrum.
Six of the nine bidders — Bharti Airtel, Reliance Telecom, Idea Cellular, Tata Teleservices, Aircel and Vodafone Essar — have bid for all 22 telecom circles. While Videocon bid for one, S Tel and Etisalat DB bid for limited number of circles.