3G auctions cautious beginning.
India’s first-ever auction of spectrum for third generation (3G) telephony services began on a cautious note.
For a pan-India licence, the highest offer was Rs 3,919 crore on the first day, just 12 per cent higher than the base price of Rs 3,500 crore.
On the basis of the bids coming in today, the government will garner at least Rs 16,000 crore from these auctions. However, this figure is likely to rise sharply as higher bids come in the next two weeks. The government, according to the Budget for this year, expected to raise Rs 35,000 crore from these auctions, which, according to government officials, may well be surpassed.
There are six companies in the race for a pan-India licence, which spans 22 circles. These are Bharti Airtel, Vodafone Essar, Reliance Communications, Idea Cellular, Tata Teleservices and Aircel.
| EARLY BIRDS After five rounds on the first day, the results of 3G bidding | ||||
| Circle | Base price (Rs cr) | Highest bid (Rs cr) | Available slots | Bidders |
| Delhi | 320 | 373.29 | 3 | 3 |
| Mumbai | 320 | 362.66 | 3 | 4 |
| Maharashtra | 320 | 362.66 | 3 | 4 |
| Gujarat | 320 | 362.66 | 3 | 4 |
| AP | 320 | 362.66 | 3 | 4 |
| Karnataka | 320 | 362.66 | 3 | 3 |
| TN | 320 | 362.66 | 3 | 4 |
| Kolkata | 120 | 135.99 | 3 | 3 |
| Punjab | 120 | 121.20 | 4 | 4 |
| Haryana | 120 | 134.65 | 3 | 2 |
| UP(E) | 120 | 135.99 | 3 | 3 |
| UP(W) | 120 | 135.99 | 3 | 3 |
| Kerala | 120 | 134.65 | 3 | 3 |
| Rajasthan | 120 | 13362 | 3 | 2 |
| MP | 120 | 133.62 | 3 | 3 |
| West Bengal | 120 | 121.20 | 4 | 3 |
| HP | 30 | 30.30 | 4 | 1 |
| Bihar | 30 | 30.30 | 4 | 1 |
| Orissa | 30 | 30.30 | 3 | 0 |
| Assam | 30 | 30.30 | 3 | 0 |
| NorthEast | 30 | 30.30 | 3 | 1 |
| J&K | 30 | 30.30 | 4 | 0 |
The auction, which began at 9 am, saw as many as five rounds on the first day — much lower than the 7-8 rounds expected by many firms.
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Delhi managed to attract the most aggressive bids. The bid price hit Rs 373 crore, 16.56 per cent more than the base price of Rs 320 crore.
The other circles like Mumbai, Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu, which had a similar base price for the auction, however managed to attract Rs 362.6 crore as the highest bid.
Amongst the Category B circles, Kolkata, UP (East) and UP (West) attracted higher bids of Rs 135.99 crore — is 13.25 per cent higher than the base price of Rs 120 crore.
In Category C circles, the demand for 3G spectrum was very low. Orissa, Assam and Jammu & Kashmir circles saw no bidders on the first day, while in Himachal Pradesh, Bihar and the North east, only one bidder showed interest.
According to the rules of the auction, the prices could up by 1 to 10 per cent with every round. The maximum increase was 12-13 per cent in the beginning of the auction, which reflects conservative bidding, according to some analysts.
However, some analysts are confident the prices would increase significantly as the process moves forward.
“It is too early to say anything from the first day of bidding…we will see action in the later rounds of the auction. Moreover, auction rules are designed in such a way that companies will not be able to go overboard with the prices,” telecom analyst Mahesh Uppal said.
Further, he said stakes in Category C circles are very low since the companies are not facing any spectrum constraint in these circles. Metros and Category A circles would definitely attract more attention from bidders.
A senior executive of a telecom firm which participated in the bidding, said, “The companies will tread slowly and understand the auction process first. You could bid in some circles and have roaming arrangements in other circles for consumers. This way, one does not need to go pan-India and bid heavily.”
Romal Shetty, Head-Telecom, KPMG, “No firm will pay high amounts on the first day itself. The Indian market is recession-hit and margins are falling. If this bidding was done 2-3 years earlier and there were only 6-7 players in the market, it would have been more aggressive.”