InvestorQ : What was the progress on the second day of the telecom spectrum auctions on Tuesday?
ishika Banerjee made post

What was the progress on the second day of the telecom spectrum auctions on Tuesday?

1 year ago

One can broadly say that the auction was a tad disappointing for the government as the premium airwave bands remained unsold during the auction. Out of the total proposed reserve price collections of Rs.4 trillion, the telecom spectrum auctions managed to collect only around dRs.77,815 crore by the time it concluded on Tuesday. That is less than 20% of what the government was hoping to collect.

During the auction, the bids were received for the 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz bands. However, there were literally no takers coming forward for airwaves in the premium 700 and 2500 MHz bands. That becomes a problem because, the 700 MHz band alone accounted for 33% of the spectrum on offer. Even in 2016, the government had tried to sell the 700 MHz band but there had been no takers for the same.

The spectrum usage charges or SUC will be levied at the rate of 3% of the annual gross revenues or the AGR. The biggest spectrum allocation was received by Reliance Jio which successfully bid for 488.35MHz and committed Rs.57,123 crore. Bharti Airtel infused a smaller Rs.18,699 crore into spectrum while Vodafone could only get spectrum worth Rs.1,994 crore due to the funding constraints that is already under.

Overall, the government would be disappointed for multiple reasons. Firstly, the premium 700 MHz band remained unsold and telecom companies were not willing to invest in additional hardware infrastructure essential for these premium bands. Secondly, the government gets 25% upfront for normal bands and 50% upfront for premium bands and the kind of revenues the government was projecting for the year will fall woefully short.