Spectrum Auction 2016: Bids worth Rs 53K crore plus received on Day 1

By Nandita Singh

BENGALURU: Reliance Jio, Bharti Airtel, Vodafone, Idea Cellular, RCom, Aircel, Tata Teleservices... 7 bidders and a total of 2354.55 MHz of spectrum frequencies across 7 bands...

India’s largest spectrum auction for mobile airwaves valued at Rs 5.63 lakh crore opened for bidding  today (October 1, 2016 ) at10 am and by 7 pm, at the close of bidding hours, total bids worth Rs 53,531 crore were received.

The 2016 spectrum auction is an opportunity for telecom companies to write-off their spectrum-crunch related woes. India’s Telecom Secretary J S Deepak had advised telcos to “tank up” spectrum for “next generation of services” as that will form backbone of the country’s visionary Digital India agenda. Ahead of the auction, he also stated that after the current auction round concludes the focus would be on spectrum harmonization, and that the next round of auction is a long time away.

In June of 2016, the NDA government had decided to resolve the issue of “not enough spectrum” by making a total of 2354.55 MHz of spectrum available in a single auction in Simultaneous Multiple-Round Ascending (SMRA) format for 7 bands -- 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz.

The total spectrum block put on auction also includes 197 MHz of additional spectrum in 1800 MHz band and 37.5 MHz in 800 MHz band released due to harmonization of spectrum in these two bands.

Here are more details on spectrum available for auction.

The winning bidder can exercise either full upfront or deferred payment option. Under deferred payment option, the quantum of upfront payment in case of over 1GHz band (1800 MHz, 2100 MHz, 2300 MHz & 2500 MHz) has been modified from 33% applicable in the 2015 auction to 50% of the bid amount for 2016 auction.

The spectrum will be assigned to the successful bidder within 30 calendar days from the date of receipt of due payment. Also, for the successful bidder, the lock-in period of equity in the company has been reduced to one year instead of three years or completion of roll out obligation, whichever is later, as was applicable in 2015 auction.

Besides, the method of calculation of spectrum cap has also been modified. Now, the spectrum surrendered  also gets included in the calculation of spectrum cap apart from the spectrum put to auction and assigned spectrum. Also, the spectrum cap will not be reduced in case the spectrum is allocated for non-commercial use after auction.

This apart, easing of roll out obligation and streamlining of frequency allocation have been put in place for contiguous spectrum allocation in 2016 auction.

Earlier in September, Department of Telecom (DoT) had received about Rs 15,000 crore from the 7 bidders in earnest money with Reliance Jio depositing the highest guarantee of nearly Rs 6,500 crore, making it the only company eligible to buy pan India spectrum in 700MHz band.

According to market analysts, the stage is set for high action in 800, 1800 and 2100 MHz, while 900 MHz will see moderate action, and very little action will be seen in 700, 2300 and 2500 MHz bands.

Fight for Asia’s second largest mobile market has already resulted into a tariff war and an "interconnect fracas" between incumbents and the new entrant Reliance Jio, after Jio announced commencement of operations on September 5, this year.

Now, it is high stakes game for all involved. More so for Vodafone, and Idea Cellular from the Top 3 league, as both need to boost their spectrum holding, to stand up to-and-compete with Reliance Jio and India’s No. 1 telco Bharti Airtel in order to defend and grow their marketshare.

DoT will make bidding results publicly available at its website everyday after bid closing at 7 pm.

One can also see the visualization of supply versus demand, and end of day provisional winning price across bands and across circles at the site maintained by Prof V Sridhar and his students at IIIT-Bangalore  here. (Please note this link is a student project and you can mail your feedback on this at vndedit@cybermedia.co.in)

Also Read: Fight for Spectrum