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At the end of the third day of the telecom spectrum auctions, 700 MHz band remained unsold.
According to sources within the government, reasons such as service tax on spectrum purchase from this year, high reserve price for 700MHz (₹11,485 crore per MHz for 5MHz put up for auction pan India) and uncertainty over interconnect usage charge (IUC) seem to have made it unattractive.
Adding to these was free calls and data services started by Reliance Jio, which has shaken the telecom industry and there is still uncertainty in the market as there is no clarity from TRAI on issues of IUC, a government official told BusinessLine .
The official said in such a situation, why would an operator take risk of bidding 700MHz. “For a common man the logic applies like this – If I have around ₹60,000 crore for buying 5MHz of 700MHz, plus taxes, why should I buy it? Instead, I can buy a company (operator) of the same amount itself. I should buy a competition, rather than compete in the auctions.”
Therefore, the government expects least number of airwaves to be auctioned in the 700MHz and hopes to sell at least 1MHz in one of the circles. If the trends in the latest auctions are anything go by, then the government will not even get closer to ₹1 lakh crore, out of total value of ₹5.63 lakh crore (as per reserved value price of each band), compared to around ₹1.10 lakh crore in the last auction.
Meanwhile, the activity reached 100 per cent on day three of the auctions and total bidding amount was closed at ₹60,969 crore. So far, 17 rounds of bidding have been done — five rounds on Saturday and six rounds each on Monday and Tuesday.
Analysts and officials at Department of Telecom (DoT) expected the auctions would continue for the next few days. Last year also, the 100 per cent activity started after 75 rounds of auctions, out of the total 115 rounds that lasted for 19 days.
The seven telecom operators, including Airtel, Aircel, Idea, Reliance Communications (RCom), Jio and Vodafone, are participating in the auctions. They had submitted total earnest money deposit (EMD) of around ₹15,000 crore.
According to a senior official at DoT, the government is ‘certainly expected to sell at least 913 MHz’ units of bands (as these many units have been locked) out of the total 2,354.75 MHs put up for auctions this year.
Most of the activities were seen in 2500 MHz on Tuesday and only three circles – Bihar, Karnataka and Tamil Nadu – were not in demand out of the 22 circles. The 2300 MHz were sold on the first day itself.
There was no change in the 800 MHz (except for Gujarat).
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