Auctions for telecom airways concluded on Tuesday with operators committing to obtain a total of 855.60 MHz of spectrum worth Rs 77,814.80 crore. The auctions have been completed in the shortest time considering that the method began in 2010.
The government will get an upfront quantity of about Rs 27,000 crore from the operators — Rs 20,000 crore in FY21 and the remaining Rs 7,000 crore in FY22 when some spectrum would be produced offered.
The government place up a brave front, saying the outcome was satisfactory offered the pandemic and monetary position of the business and that the revenues have been larger than its internal estimate of about Rs 45,000 crore.
However, from objective accounts, what was sold was far significantly less than what was place up for sale.
Consider the numbers. A total 2,308 MHz of spectrum was place on auction which, at the reserve price tag, was worth Rs 3.92 lakh crore. This indicates that only 37% of airwaves have been sold and two bands, 700 MHz and 2500 MHz, drew a blank. The 700 MHz had drawn a blank even in 2016 due to the higher reserve price tag and the government now has no choice but to create to the Telecom Regulatory Authority of India (Trai) to lower the price tag.
Reliance Jio purchased the maximum spectrum, 488.35 MHz worth Rs 57,122.65 crore and will spend Rs 19,939 crore upfront. Bharti Airtel was next with 355.45 MHz for Rs 18,698.75 crore and will spend about Rs 7,000 crore upfront. Vodafone Idea purchased the least, 11.80 MHz for a total quantity of `1,993.40 crore.
The spectrum purchased and the amounts committed are on anticipated lines as the maximum quantity of spectrum coming up for renewal, later throughout the year, belongs to Jio. Also, Vodafone Idea getting financially weak had submitted the lowest earnest income deposit.
Operators require to spend 25% of the total bid quantity for spectrum beneath 1 GHz like 800 MHz, 900 MHz, and 50% for above 1 GHz like 2300 MHz, 1800 MHz. The balance can be paid in instalments spread more than 16 years right after a two-year moratorium.
In terms of mix, of the total 488.35 MHz spectrum purchased by Jio, 74.60 MHz was in the 1800 MHz band, and 280 MHz was in the 2300 MHz band.
Of the total 355.45 MHz purchased by Bharti, the mix was as follows: 48.85 MHz in the 800 and 900 MHz bands 86.6 MHz in the 2100 and 1800 MHz bands and 220 MHz in the 2300 MHz band.
Trai had in August 2018 suggested the reserve price tag for these auctions. While this was significantly reduced than that fixed for the 2016 auctions, it was nevertheless perceived by the business to be on the larger side. The government had written to Trai to contemplate lowering the price tag additional but the regulator did not oblige.
In the premium 4G spectrum (700 MHz), Trai had decreased the reserve price tag by 43% compared with the 2016 auctions, at `6,568 crore per MHz, for a pan-India 5 MHz block, for which operators would have had to shell out Rs 32,840 crore.
In the 2016 auctions, the government had mopped a total quantity of Rs 65,789 crore, 4% more than the reserve price tag, from the operators who participated in the bidding. This was noticed as a lukewarm response as only 965 MHz spectrum got sold against a total of 2,353 MHz place up on sale, which means only 40% got sold.