InvestorQ : What was the outcome of the bidding for telecom auctions on the first day? Did the big 3 names in Indian telecom participate in the auctions?
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What was the outcome of the bidding for telecom auctions on the first day? Did the big 3 names in Indian telecom participate in the auctions?

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5 months ago
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The Indian government started its telecom auctions after a gap of almost five years. This spectrum auction was special because it is India's first auction of telecom spectrum since 2016. The auction attracted bids to the tune of Rs.77,146 crore on the first day of the auctions with Reliance Jio, Bharti Airtel and Vodafone Idea putting in their respective bids.

Total spectrum on offer is approximately 2,250 MHz of spectrum which is spread across seven bands and having a reserve price value of Rs.392,000 crore at the bare minimum. Of course, depending on the perceived value of the bandwidth, the actual collections could be higher. This is also an important revenue booster for the government for FY21.

The government received bids for 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz bands, but there were no takers for the premium 700 and 2500 MHz bands. Incidentally, nearly 33% of the spectrum being auctioned is in the premium 700 MHz band as the same spectrum had got zero bids in the 2016 spectrum auctions and hence was carried forward to the current auction of 2021.

Bidding will continue on Tuesday also. Most of the telecom operators are unwilling to bid for a new spectrum bands requiring incremental investments. With Bharti and Vodafone having a huge amount payable to the government in the form of retrospective dues, it may be hard for them to really justify any kind of fresh investments at this point other than incremental funds into existing properties. The assigned spectrum will be valid for 20 years.

The government is betting big time on the spectrum auctions for boosting revenues in the current fiscal year. The upfront payment is 25% of final bid amount in 700 MHz, 800 MHz and 900 MHz while it is 50% for the rest of the bands. Other than the upfront payment, the balance is payable in 16 equated instalments after a 2-year moratorium. The government hopes to collect close to Rs.150,000 crore or more as upfront fees from these auctions.

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