Government has collected Rs 3,625 crore as earnest money deposit (EMD) from six pre-qualified bidders as per Department of Telecommunications latest announcement on its website.
“The published data indicates muted participation by most players. EMD amount disclosed for Bharti Airtel (Bharti) and Vodafone of Rs 1.03 billion and Rs 2.29 billion, respectively, suggests that their participation may be limited to just top up (3 slots of 1.25mhtz available) in a few circles,” said Sandip Agarwal, analyst with domestic brokerage Edelweiss in his note.
Similarly, the EMD of Rs 13.06 billion and Rs 0.22 billion for Idea and Tata Tele services (TTSL) respectively suggests that they have restricted their participation to circles where their licenses have been cancelled.
Videocon has been the biggest surprise as its EMD of Rs 6.48 billion (in GSM) and Rs 2.2 billion (CDMA) belies the speculation that it is targeting a pan-India licence for both GSM and CDMA. The EMD implies that participation has been limited to a few circles. It also rules out partnering with Reliance purely on spectrum grounds.
“The limited participation in 2G auction suggests that unhealthy competition in auction bidding (like 3G) and price war (tariff and discounts) are things of the past, and increasingly focus of all players will be on margin and profitable growth rather than volume growth,” said Agarwal.
