The auction to sell 2G spectrum picked up pace on Monday. According to the latest bids, an estimated Rs. 45,000 crore is expected to be earned by the government even as telecom scrips showed signs of nervousness because of the robust competition.
Aggressive bids, both in the 900 and the 1,800 megahertz (MHz) spectrum bands, resulted in telecom stocks to falling sharply by 8.5%, spooked at the possible pressure on the balance sheet of telcos. Shares of Idea Cellular tanked 8.43%, Reliance Communications lost 3.95% and Bharti Airtel fell by 2.57% on the Bombay Stock Exchange (BSE).
However, the increase in pace and aggressive bidding is bound to garner revenues of more than `50,000 crore. The revenue to the government from 2G spectrum bids are estimated on the basis of a points system linked to the value of bids received. The bids can be withdrawn, and the total amounts on offer can fluctuate during the auction process.
The government targets an amount of `40,847 crore from the auction in the current year, while overall bids had totaled `43,000 crore at the end of the sixth day of bidding that started on February 3. If all bids materialise, the government hopes to garner as much as `60,000 crore.
On day seven, circles like Delhi, Mumbai, Assam, Gujarat and Uttar Pradesh West saw demand go up, while circles like Bihar and Kolkata showed lower demand. These two circles had accounted for a large chunk of the bids in the first two days of the auction.
Bid trends on day seven indicate that the amount government could earn surpassed the 316.93 crore internal target, which is the cost of a 3G pan-India licence.