Fierce bidding, excess demand in Delhi for 900-MHz spectrum band

The price of spectrum in the 900-MHz band jumped an average of 61.79 per cent as compared with the original reserve price the government had set at the end of Wednesday, the third day of the telecom spectrum auction.

Delhi received the most aggressive bidding on Wednesday, with demand for five MHz of extra spectrum. But, demand for spectrum tapered in the lucrative Mumbai circle (to five MHz) and Kolkata (to seven MHz) in the 900-MHz band, as telcos stayed away from aggressive bidding at higher prices in the last few rounds.

Price in Delhi rose 8.2 per cent from Tuesday's provisional winning price, while the increase was 59.6 per cent as compared with the original reserve price. Prices in Mumbai marginally increased by just two per cent from the previous day, while it jumped 71.9 per cent (maximum in any circle) as against the government set base price. Kolkata saw an increase of 53.8 per cent rise so far since beginning, while the increase was only five per cent on the third day from Tuesday's provisional price.

The average price rose just 5.05 per cent to 15.5 per cent at the end of the third day from Tuesday's provisional winning price in the band.

In the 1800 MHz band, there were excess demand in Assam, Bihar and West Bengal at the end of the third day of spectrum auction. The average price increase in the 1800 MHz band at the end of Wednesday (as compared with the original base price) is around 6 per cent.

Price increase (as compared with original base price) in 1800 MHz band was highest in Gujarat (34.05 per cent), followed by Assam (33.57 per cent), UP West (22.58 per cent), Maharashtra (13.55 per cent), Bihar (11.08 per cent), West Bengal (6.66 per cent), Delhi (1.98 per cent) and Madhya Pradesh (0.93 per cent) at the end of the third day of auction.

If the entire spectrum put on auction gets sold in the 900 MHz band, with the 1800 MHz band in line with demand from the telcos, the government will make close to Rs 48,500 crore at Wednesday's provisional winning price, about 27.9 per cent more than the value of the entire spectrum at the reserve price. As companies pay in instalment mode, the government has made Rs 13,792.94 crore, higher than its year's Budget target of Rs 11,343 crore.

On the first day of the auction, the government had secured around Rs 42,000 crore (according to Monday's provisional winning price), with the average bid price for the three 900 MHz circles 34 per cent higher than the reserve price. On Tuesday, after the end of five additional rounds, the government's revenue was expected to reach a level close to its proceeds from sale of 20 MHz of 3G spectrum (Rs 50,968 crore).
SPECTRUM AUCTION: DAY 3
1800 MHz (Only circles where prices have increased)

• Demand for excess spectrum in the 1,800 MHz band was in Assam, Bihar and West Bengal
• Prices have increased (as compared with the original reserve price) Gujarat (34.05%, Assam (33.6%, UP-west (22.6%, Maharashtra (13.5%), Bihar (11%), West Bengal (6.7%), Delhi (2%) and Madhya Pradesh (1%)
• Total estimated earnings* - Rs 48,485.6 crore at the end of Day 3

* If all spectrum on offer in the 900-MHz band gets sold at Wednesday's provisional price and 1,800-MHz band sale is demand based at Wednesday's price