Spectrum auction: Delhi becomes darling of telcos on Day-4

The 900-MHz spectrum band price soared 78% from the base rate on Day-4 of auction

On the fourth day of telecom spectrum auctions, Delhi emerged the key focus circle for telecom companies. The circle saw a 78 per cent jump in prices at Rs 639 crore for one MHz of airwaves in the 900-MHz band, compared to the original reserve price.

So far, the current round of auctions is likely to have fetched the government about Rs 50,000 crore, close to what it had garnered by selling 20 MHz of third-generation spectrum to private operators in 2010.

The average rise in spectrum prices in the 900-MHz band stood at 68 per cent at the end of Thursday’s auction, compared to the original reserve price set by the government. If the entire spectrum being auctioned in the 900-MHz band is sold, with the 1,800-MHz band, the government will make about Rs 50,141 crore at Thursday’s provisional winning price, about 32 per cent more than the value of the entire spectrum at the reserve price.

As companies pay in instalments, the government has made Rs 14,792 crore so far, against the Budget target of Rs 11,343 crore.

Towards the end of Thursday’s auctions, demand for 900-MHz spectrum fell across circles. The aggregate demand for the Delhi circle was 10 MHz (against 16 MHz on sale); for Mumbai, it was five MHz (16 MHz up for grabs),  and for Kolkata, demand stood at seven MHz (14MHz for sale).

Prices for the Delhi circle rose 11 per cent from Wednesday’s provisional winning price, while the prices for 900-MHz spectrum remained unchanged for the Mumbai and Kolkata circles.

In the 1,800-MHz band, there were excess demand for the Assam, Jammu & Kashmir, Madhya Pradesh, Uttar Pradesh (East) and Uttar Pradesh (West) circles at the end of Thursday’s auction. The price of 1,800-MHz spectrum increased (compared to original base price) the most in Assam (80 per cent), followed by Gujarat (40 per cent), Uttar Pradesh-West (36 per cent), Maharashtra (31 per cent), Bihar (14 per cent), West Bengal (13 per cent), Delhi (five per cent), Madhya Pradesh (four per cent) and Uttar Pradesh-East (three per cent).