Spectrum auction: Day 2 closes with bids worth Rs 56,872 crore

New Delhi: Spectrum auction appeared to slow down on Day 2 with total bids advancing to Rs 56,872 crore mainly due to demand for widely-used 1800 Mhz band but premium 700 Mhz and 900 Mhz bands found no takers even on Monday.

The auction on the first day had closed with bids worth Rs 53,531 crore. With six rounds of bidding today, the total number of rounds conducted so far stands at 11.

The demand for mobile airwaves trickled in for select circles like Mumbai, UP East and West and Gujarat .

The demand was witnessed in the bands of 800Mhz, 1800Mhz, 2100Mhz, 2300Mhz and 2500Mhz. However, the premium spectrum bands of 700Mhz and 900Mhz continued to be ignored by operators even today, seemingly on account of high pricing.

The bidding will resume tomorrow at 0900 hrs.

Airwaves in the 1800 Mhz band -- which can be used to provide 4G and 2G services -- continued to be in demand in circles of Mumbai and UP East. The price of spectrum in this band increased in Mumbai, Rajasthan, UP East and West and Haryana circles.

During the day, Gujarat, Rajasthan, Uttar Pradesh (East) attracted bidders interest in 800 Mhz band, which is seen as the next best alternative to 700Mhz band in terms of efficiency and transmission of signals but is not as expensive.

Spectrum demand was seen in 2300 Mhz band for circles of Bihar, Gujarat, Kerala and Maharashtra. The frequency band has been touted as a low price alternative to bands like 700 Mhz, 800 Mhz and 1800 Mhz for providing 4G services.

Telecom operators also placed demand for 2100Mhz band spectrum in Delhi, Maharashtra, Bihar J&K, Kerala, Odisha, Punjab, Rajasthan, Tamil Nadu and UP East. This band is used for providing 3G services.

The higher the frequency, the lower is its pricing as coverage and efficiency tapers with increase in spectrum band value.

Still demand was seen for 2500 Mhz band in Delhi, Gujarat, Kolkata, Maharashtra and Mumbai, Rajasthan, UP East, UP West, and Bengal. This band is considered to be useful where population density is high.

Seven telecom companies -- Bharti Airtel, Vodafone, Idea Cellular, Reliance Jio, Aircel, Reliance Communications and Tata Teleservices -- are in fray for acquiring 3G and 4G airwaves that are going to be crucial for maintaining competitive edge in the market and offering next generation services in the world's second largest telecom market.

"No bidding in the premium 700 MHz band clearly indicates that the operators are not ready to commit investments to the overtly priced band with under developed ecosystem," Prashant Singhal, Global Telecommunications Leader, EY said.

The premium 700 MHz band is being auctioned at a reserve or base price of Rs 11,485 crore per Mhz. This band alone has the potential to fetch bids worth over Rs 4 lakh crore, if the entire spectrum in this band is sold at the base price.

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.

As much as 2,354.55 megahertz of frequencies have been put up for auction in seven bands valued at Rs 5.63 lakh crore at base price.