Dissecting the first day of the spectrum auction

Seven out of 22 circles see demand match supply, exceed it

At least seven out of the 22 circles saw demand match supply or exceed it on the first day of bidding. Besides Delhi, Mumbai and Kolkata circles in the 900 MHz band, Gujarat, Bihar, UP west and West Bengal in the 1800 MHz band also saw huge interest.

Other circles in the 1800 MHz band which saw activity include Assam (demand was 98% of the availability of spectrum), Maharashtra (99%) and Karnataka (92%). The availability of spectrum in these circles is: Assam (11.4 MHz), Maharashtra (14 MHz) and Karnataka (24.6 MHz) in 1800 MHz band. What this simply means is that incumbent operators as well as new players see large potential in revenue generation in these circles.

The pressure on Gujarat (12 MHz), West Bengal (13 MHz) and Bihar (4.2 MHz) is understandable as they have limited spectrum availability.

The level of activity, which is calculated as a percentage of actual availability in relation to the demand of spectrum, gives an indication of the maturity of the auction as well as a direction as to which are the key circles of interest.  

Surprisingly, the lowest activity in the 1800 MHz band was for Haryana, where it was only 30% of the total availability of 16.4 MHz. It was followed by Tamil Nadu (33%) and Orissa (38%). The reason for the low activity relatively could be because in Tamil Nadu as much as 30.2 MHz of spectrum is available, which is the highest for any circle in the country.

There are fears that some of the incumbent players like Bharti and Vodafone will not be able to retain their spectrum in the 900 Mhz band (about 8 MHz) in Delhi, Mumbai and Kolkata circles. This led to heightened activity for spectrum in the 1800 Mhz band on the first day itself despite the fact that lot of spectrum is available in these circles.  After all, Delhi has as much as 22.8 MHz of spectrum in the 1800 MHz band, Mumbai has 25.2 MHz and Kolkata 26.8 Mhz. On the surface, there is enough for everyone.  

However, the incumbents simply have to buy spectrum in the 1800 MHz band (to compensate for any likely loss in 900 MHz) to ensure that their customers do not get impacted in these lucrative circles. So the demand of spectrum in Delhi in the 1800 MHz band was 84% of its availability while in Mumbai it was at 77%. The number in Kolkata was 68%.

However, telcos say that the bidding in these circles will become more aggressive after incumbent operators are clear on who comes out as the victor in the 900 Mhz band. The losers will obviously then push for the 1800 Mhz band.       

Day 1 Auction Results
Sr.No	Circle	Band	RP (Rs Cr)	Agg Demand	Excess Demand	Total Blocks	Total MHz	Sold MHz	% Sold	PWB (Rs Cr)	RD Price Inc %	Value (Rs Cr)
1	AP	1800MHz	32.6	92	-21	113	22.6	18.4	81%	32.6	0.00%	2999
2	Assam	1800MHz	1.4	56	-1	57	11.4	11.2	98%	1.4	0.00%	78
3	Bihar	1800MHz	7.4	11	-1	12	2.4	2.4	100%	8	8.00%	96
4	Delhi	1800MHz	43.8	88	-17	105	21	17.6	84%	43.8	0.00%	3854
5	Gujarat	1800MHz	28.6	71	11	60	12	12	100%	29.7	4.00%	1784
6	Haryana	1800MHz	5.4	25	-57	82	16.4	5	30%	5.4	0.00%	135
7	HP	1800MHz	1.2	51	-51	102	20.4	10.2	50%	1.2	0.00%	61
8	J&K	1800MHz	1	9	-13	22	4.4	1.8	41%	1	0.00%	9
9	Karnataka	1800MHz	31	113	-10	123	24.6	22.6	92%	31	0.00%	3503
10	Kerala	1800MHz	10.4	103	-37	140	28	20.6	74%	10.4	0.00%	1071
11	Kolkata	1800MHz	14.6	85	-40	125	25	17	68%	14.6	0.00%	1241
12	MP	1800MHz	8.6	53	-43	96	19.2	10.6	55%	8.6	0.00%	456
13	Maha	1800MHz	34.6	69	-1	70	14	13.8	99%	34.6	0.00%	2387
14	Mumbai	1800MHz	41.4	90	-27	117	23.4	18	77%	41.4	0.00%	3726
15	NE	1800MHz	1.4	72	-53	125	25	14.4	58%	1.4	0.00%	101
16	Orrisa	1800MHz	3.2	50	-81	131	26.2	10	38%	3.2	0.00%	160
17	Punjab	1800MHz	10.8	64	-28	92	18.4	12.8	70%	10.8	0.00%	691
18	Rajasthan	1800MHz	5.2	52	-43	95	19	10.4	55%	5.2	0.00%	270
19	TN	1800MHz	41.6	50	-101	151	30.2	10	33%	41.6	0.00%	2080
20	UP (E )	1800MHz	12.2	31	-9	40	8	6.2	78%	12.2	0.00%	378
21	UP (W )	1800MHz	12.4	3	-9	12	2.4	2.4	100%	13.1	6.00%	158
22	WB	1800MHz	4.2	28	-28	56	11.2	11.2	100%	4.2	1.00%	237
23	Delhi	900MHz	360	16	0	16	16	16	100%	428.9	19.10%	6863
24	Kolkata	900MHz	125	13	-1	14	14	14	100%	173.2	38.50%	2424
25	Mumbai	900MHz	328	21	5	16	16	16	100%	473.2	44.30%	7572

Total (Rs Cr)        42336