India's biggest auction of telecom spectrum ended on a whimper today with just Rs 65,789 crore of bids coming in over five days against an expectation of Rs 5.6 lakh crore, leaving nearly 60 percent of airwaves, including premium 4G bands, unsold.
UK-based Vodafone's India unit was the most aggressive, taking home Rs 20,000 crore worth of spectrum. Bharti Airtel, the nation's biggest telecom company, bought Rs 14,244 crore worth of spectrum, while Idea Cellular put in Rs 12,798 crore of bids.
Newcomer Reliance Jio has spent Rs 13,672 (rpt) 13,672 crore on spectrum buying.
Telecom Minister Manoj Sinha said bids were received for 964.80 MHz of spectrum out of 2,354.55 MHz across seven bands put on offer.
"The total upfront payment to the government is about Rs 32,000 crore which is the highest in the last five years. Wherever operators wanted to improve their data services, they participated. Total, we could sell 964.80 MHz of spectrum," Telecom Minister Manoj Sinha told reporters here.
Asked if he was disappointed with the muted response, Sinha said he was happy with fact that the government will get the highest upfront payment received in the last five years.
Premium 700 MHz and 900 MHz spectrum found no takers, mainly because of high reserve or auction start price set by the government.
While Airtel acquired 173.8 Mhz spectrum across 1800/2100/2300 MHz bands, Idea Cellular won 2100 Mhz band spectrum in Mumbai circle.
Reliance Jio official did not disclose the amount the company put in the auction and only said "the government process is not yet complete."
Reliance Jio said it has acquired 269.2 MHz spectrum across all 22 circles.
"We have expanded our spectrum footprint thereby significantly enhancing capacity of our all-IP data strong network and ensuring world class services for all Indians. Jio is committed to taking India to global digital leadership by bringing the power of data to all Indians," Reliance Industries Chairman Mukesh Ambani said.
Idea said it has procured 349.2 MHz of spectrum for Rs 12,798 crore securing additional airwaves in 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.
According to sources, Tata Teleservices shelled out Rs 4,500 crore for securing spectrum. It has also managed to retain spectrum in Mumbai, where its licence is set to expire next September.
Spectrum in 1800 Mhz can be used for 2G/4G services, while 2100 Mhz band supports 3G/4G services. The 2500 Mhz is a 4G band, 2300 Mhz (4G) and 800 Mhz (2G/4G).
Telecom operators were in the race to arm themselves with spectrum to maintain competitive edge in providing quality and next generation mobile services to consumers in the world's second largest telecom market.
The auction, which commenced on October 1, was spread over five days and 31 rounds.
"The issue of quality of service, spectrum scarcity in India is history with this auction. Government has not done any profiteering, this auction was about putting spectrum in the hands of the industry. The appetite of the industry has been satiated," Telecom Secretary JS Deepak said.
The government sold the entire available spectrum in the 2300MHz band, while 700MHz and 900MHz remained untouched.
Industry body COAI said lack of enthusiasm for 700MHz band was majorly due to its "unrealistic pricing", high debt and single-digit growth that the industry is currently reeling under.
"We are hopeful the Government and the DoT will take cognizance of the role a high reserve price had on bidding, as far as the 700 MHz is concerned, and will recalibrate the price so that spectrum in the band could be put up for auction, maybe two years from now," COAI Director General Rajan S Mathews said.
Government sold about 20 percent of the airwaves in 800MHz, 79 percent in 1800MHz, 24 percent in 2100MHz and 62 percent in 2500MHz band.
As per the rules, companies winning spectrum in frequency bands above 1Ghz -- 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz -- will have to make 50 percent upfront payment, while the rest can be paid in 10 years after a two-year moratorium.
This means that the government would get about Rs 32,000 crore in upfront payment. However, this is short of the government's target of getting Rs 64,000 crore from auction for this fiscal.
One of the fastest growing markets globally, India is also home to the world's second largest base of mobile users with 1,059.86 million wireless customers.
Bharti Airtel had 255.7 million subscribers, while Vodafone, Reliance and Idea Cellular had 199.3 million, 98.7 million and 176.2 million users, respectively as on June, 2016.
As per rating agency ICRA, the consolidated debt level of the industry stood at around Rs 3,80,000 crore in December 2015 against Rs 2,90,000 crore in March 2014. This is expected to rise further as companies make payments for the acquired spectrum.
The total value of spectrum at the base price that was put for auction was more than double the gross revenue of the telecom service industry. Telecom operators had a gross revenue of Rs 2.54 lakh crore in 2014-15.
On Day 1, bids worth Rs 53,531 crore were received by the government, but in the following days, the activity level dropped with about Rs 3,341 crore worth of additional bids being made on Day 2 and Rs 4,097 crore at the end of Day 3.
The auction on Day 4 ended with a meagre addition of Rs 2,531 crore, taking total bids to over Rs 63,500 crore.
The government has fixed a pan-India reserve price of Rs 2,873 crore per Mhz for spectrum in 1,800 MHz band; Rs 3,341 crore for 900 MHz; Rs 5,819 crore for 800 MHz; Rs 3,746 crore for 2,100 MHz; Rs 11,485 crore for 700 MHz and Rs 817 crore each for 2,300 MHz and 2,500 MHz bands.
The higher the frequency, the lower is its pricing as coverage and efficiency tapers with increase in spectrum band value.
In 2015, the auctions went on for 19 days, fetching the government around Rs 1.1 lakh crore. The auctions fetched Rs 61,162 crore in 2014 after just 11 days and 68 rounds of bidding.
The auction conducted in 2010 for 3G airwaves in the 2100 Mhz band has been the longest that lasted for 34 days. PTI