Spectrum Auction: Day 1 Sees Bids in excess of 77,146 Cr

On Day 1 of the Spectrum Auction, all three major telecom operators participated, raising bids of a total INR 77,146 Crores. Notably, these bids are against Government's estimates of around 50,000 Crores. This is the first auction in 5 years and looks like it is going to be an eventful one.

An Eventful Day 1 of Spectrum Auction

The Union Minister for Telecom and IT, Ravi Shankar Prasad noted that the response was better than expected. As it was also discussed previously, Center aimed to raise around Rs. 4 lakh crores from the auction of 2,308.8 MHz of spectrum across 9 bands, but due to ongoing issues with all the key players, it was estimated that the figure would be somewhere around 50,000 Cr. The first day is a positive sign, as bids were received for all but 700 MHz and 2.5 GHz bands.  Of course, given the high price of the former and the lack of demand of the latter played a role.

The most popular bands were the 2.3 GHz band and the 800 MHz bands. 89% of the former and 65% of the latter has been bid upon, while other popular bands included 1.8 GHz, 900 MHz and 2.1 GHz. These received bids for 41%, 38% and 9% of the total frequencies on sale.

5G Bands and Spectrum Auction

The reason why the 700 MHz band is so expensive (~Rs. 6,000 Crores/MHz) is due to its efficiency. With such a high efficiency as to support even 5G, this band is still not great value due to the high price. This is why every telecom is avoiding it. Given that this band went unsold back in 2016 as well, Government might be forced to reduce the price even further. Mr. Prasad said that the Government will go to TRAI for reconsideration of the price if it remains unsold.

The minister did not comment on the spectrum auction across 3.3 GHz to 3.6 GHz, the bands finalized for 5G.

However, a parliamentary report noted DoT Sec stating that the auction will be conducted in the next 6 months.