High prices put off telcos at 2G auction
India has received bids worth more than 92 billion rupees ($1.68 billion) by the end of the fifth round in an auction of 2G mobile phone airwaves that started today, telecommunications secretary R Chandrashekhar said.india Updated: Nov 13, 2012 01:18 IST
The government on Monday received bids worth more than Rs 9,200 crore on the opening day of auction for 2G mobile phone spectrum that drew scant interest due to high base price.
There was no bidder for pan-India airwaves for which the government had set a base or bid start price of Rs 14,000 crore even as demand was concentrated in select circles like Gujarat, Uttar Pradesh (East) and Uttar Pradesh (West).
Of the 22 telecom circles, which cover the entire nation, bids were received for 18, with Delhi, Mumbai, Rajasthan and Karnataka which had the highest base price drawing a blank.
"The total quantum of revenue bid is for a little over Rs 9,200 crore (at the end of the fifth round)," telecom secretary R Chandrashekhar said.
The bids received so far are a far cry from the Rs 28,000 crore minimum revenue that the government is expecting from the auction of wireless spectrum reclaimed after the Supreme Court cancelled 122 permits issued in 2008.
The government had set a bid starting price of Rs 14,000 crore for 5 megahertz of GSM airwave space in all of India's 22 telecommunications zones.
The base price was more than seven times what operators paid in 2008. Chandrashekhar said in 176 blocks of spectrum that were put on auction, bids were received only for 98.
Out of 22 circles, the demand for spectrum has crossed the offer only in Uttar Pradesh (West) and UP (East).
"The spectrum reserve price exceeded in UP (W) and UP (E) circles," the telecom secretary said.
Gujarat and Bihar received bids for all 8 blocks (of 1.25 MhZ each) that were put for auction. In rest of the circles, the demand was less than the 8 blocks that were put for auction.
COAI general secretary RS Mathews said, "The limited amount of spectrum, contrary in our opinion to the SC ruling, was guaranteed to have a very detrimental impact on the auction."
"We said that the high reserve price would ensure that limited players come into the bid and that is exactly what we have seen," he said, adding COAI had rightly predicted no bidders for several circles.
The auction, he said, would not last more than two days.
Bids were received for 7 blocks in Assam, 6 blocks each in Haryana, Madhya Pradesh, Jammu and Kashmir, Odisha, West Bengal and North East. Maharashtra telecom service area received bid for 5 blocks.
Himachal Pradesh, Kolkata and Tamil Nadu circle received bids for half of the 8 blocks of spectrum available for bidding.
Himachal Pradesh, Kerala and Punjab received bids for only one block clearly indicating that companies whose licences were affected by Supreme Court judgement, Telenor promoted Telewings and Videocon, did not bid in these circles.
The demand for spectrum in UP (W)and (E) has kept auction going as per the details shared.
Sources said the auction has drawn scant interest so far as the base price for 5 MHz of GSM radiowaves or spectrum in all the 22 zones is more than seven times of what the companies paid in 2008.
Chairman of Bharti Airtel, the nation's largest telecom company, Sunil Bharti Mittal had last week predicted that the auction would be over on first day itself because of the high base price.
Bharti Airtel, Vodafone, Idea Cellular, Norway's Telenor and Videocon are bidding for GSM, but there are no bidders for the CDMA spectrum after Tata Teleservcies and Videocon pulled out of the race.