Vodafone Group and Bharti Airtel won critical wireless telecom spectrum in Indian metros like Delhi and Mumbai and several other cities in an intensely fought 10-day auction that gave the government over Rs 61,162 crore, far exceeding its own target.
Mukesh Ambani’s Reliance Jio Infocomm, which surprised by entering the fray despite owing pan-India 4G spectrum, bid aggressively for both the bands of airwaves on offer – the premium 900MHz and not so efficient 1,800MHz, but choose spectrum only in the later band in 14 out of 22 circles.
Vodafone, whose license in Indian cities Delhi, Mumbai and Kolkata is due to expire in November this year and desperately needed spectrum in the auction to continue operations, put in bids worth Rs 19,600 crore to win 900MHz airwave in the three metros and 2G 1,800MHz spectrum in 11 circles or zones.
Airtel, whose licenses in Delhi and Kolkata was due to expire in November, won back 900 MHz in both these metros and added the same in Mumbai. It also won 1,800MHz spectrum in 15 circles. It put in total bid worth Rs 18,530 crore for a total of 115MHz of spectrum in 900MHz and 1,800MHz bands.
Sunil Bharti Mittal-promoted firm said it will roll out pan-India 4G network using 1,800MHz.
Idea was the only other company to win the 900MHz spectrum, which is capable of 3G communications, in Delhi.
In all the auction, which lasted 10 days, fetched the government Rs 61,162 crore, of which Rs 18,296.36 crore will flow to the exchequer within this fiscal. The government was initially expecting only Rs 11,300 crore of revenues to come from the spectrum auction in the current year.
Uninor won spectrum in five circles in 1,800MHz band while Idea got 11 circles in the same band. Anil Ambani’s Reliance Communications won just one circle of 1,800MHz in Mumbai. Tata Communications drew blank. Aircel got 5 circles.
“I am very happy to report that auction is over. The total revenue that will come to government is Rs 61,162.22 crore. To that extent particular auction has been extremely successful,” Telecom Minister Kapil Sibal said.
On whether the strong bidding will impact mobile tariffs, Sibal said, “But this successful auction will really be successful if we are able to provide efficient service to consumers.”
“Ultimate objective if any auction which has to provide service is that service must be provided efficiently and at a relatively affordable price. We hope the tariffs will remain reasonable in the years to come.”
The government had put on the block about 385MHz of radiowaves in the 1,800MHz band, and 46MHz in the 900MHz band. At the base price, that cumulatively amounted to about Rs 47,933 crore.
Telecom Secretary MF Farooqui said that bids worth Rs 37,572.60 crore have come in for radiowaves in 900MHz band, and Rs 23,589.62 crore for 1,800MHz band.
Companies have the option to pay 33 percent upfront for 1,800MHz band, and 25 per cent in case of 900MHz band.
“Government will get at least Rs 18,296.36 crore from upfront payment this fiscal,” Farooqui said.
The government conducted the third round of auction following a Supreme Court order in the 2G spectrum allocation case directing that all radiowaves freed from the cancellation of 122 licences in February 2012 should be auctioned. About 78MHz remained unsold in 1,800MHz.
The 900MHz had to be auctioned as some of the radiowaves in this band are held under old telecom licences, which will start expiring from November 2014.
The biggest winner in the spectrum auction, Vodafone said that it is the only operator in India now to have capabilities on all the commercial spectrum bands – 3G on 900MHz and 2,100MHz and 4G on 1,800MHz.
“We are pleased to have secured our business for the next 20 years in three of our most important circles. We have also opened the door to the next generation of mobile technology – 4G, by acquiring 1,800MHz spectrum in the places where we expect this market to take off first,” Vodafone India’s Managing Director & CEO Marten Pieters said.
Bharti Airtel said the auction has lent credence to the industry’s position that reasonable reserve prices ensure successful auctions, while high reserve prices are counter- productive.