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Contrary to expectations, the auctions for telecom spectrum held last week have raised an unprecedented Rs 74,000 crore, money that could play a big role in helping Finance Minister P Chidambaram stick to his target of holding the fiscal deficit at 4.8 per cent of Gross Domestic Product for this financial year.
Apart from the runaway success of auctions for spectrum in the 900 Mhz and 1,800 Mhz bands, telcos also agreed to pay the full amount of the one-time fee for additional spectrum, against a requirement for a 10 per cent upfront payment. This amount is expected to be between Rs 30,000 crore and Rs 40,000 crore, giving Chidambaram over Rs 100,000 crore for his coffers. That is more than double the Rs 40,000 crore he had estimated in this year’s Budget from the telecom auctions.
In a repeat of the no-holds-barred battle to grab spectrum during the auction of 3G spectrum in 2010, pan-India spectrum in the 1,800 Mhz band went for double the base price at Rs 50,560 crore. Similarly, spectrum in the 900 Mhz band went for over Rs 23,000 crore, double the base price, with a host of new players like Reliance Jio, Sistema, Telenor joining older players like Idea Cellular, Bharti and Vodafone.
Part of the reason for these unexpected high prices is that telcos anticipate prolonged political uncertainty and, therefore, are ready to pay significant premiums to acquire as much spectrum as they can. “The government opened up huge amounts of spectrum in this auction — as much as 400 Mhz in the 1,800 Mhz band and 45 Mhz in the 900 Mhz band in Mumbai, Kolkata and Delhi. Who knows when such a large chunk of spectrum will be auctioned next. So it is best to get as much as possible even if you don’t require it now,” said the CEO of a leading telecom company.
