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BW Businessworld

Spectrum Auction: Day 3 Sees Some Demand In 1800Mhz Band

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After 21 rounds of bidding at the end of the third day of telecom spectrum auctions, the biggest gainer by far is the government. At current levels, it will get a shade under Rs 50,000 crore, that’s a neat $8 billion. On Wednesday (5 February), the bid price rose by Rs 4,650 crore over the level at the end of the second day. However, there is positive demand for spectrum in any band in only four circles — Assam, Bihar, West Bengal and Delhi.

The 900MHz band in the three metros — Delhi, Mumbai and Kolkata — alone will raise Rs 20,893 crore ($3.34 billion). However, the total activity has slowed down. The price for a block of spectrum in the three cities combined rose by Rs 63.6 crore today as opposed to Rs 190.98 crore yesterday and Rs 262.32 crore on the first day.

Activity in Mumbai has slowed down sharply with an appreciation of just Rs 11 crore. In contrast, while Delhi rose by Rs 43.4 crore, it was still the least appreciation in the three days of bidding. Today Delhi at Rs 574.1 overtook Mumbai’s Rs 563.1 crore per MHz of 900MHz band spectrum. Demand for spectrum in Mumbai too fell sharply with just five bidders for 16 blocks, while Delhi saw 21 bidders for 16 blocks. Bidding in Kolkata is slow at Rs 192.71 crore, an increase of Rs 9.2 crore per MHz over yesterday.

The rising price for spectrum could affect incumbent operators like Vodafone and Bharti Airtel that have 900MHz band spectrum in the circles. The continued aggressive bidding will make it tougher for operators in an industry that is saddled with debt. However, it is possible that they would pass on the burden to consumers. That, however, would depend on the pricing strategy adopted by Reliance Jio Infocomm.

In the 1800MHz band, there was no price appreciation in 13 of the 22 telecom circles. The day saw the largest activity in the band since the auction began with prices rising in nine circles. The largest appreciation was in Gujarat and Maharashtra. Gujarat and UP West are the only two circles in the 1800MHz band that has seen an appreciation on all three days, quite in sync with the metros in the 900MHz band.

With the intensity of bidding slowing down in the 900MHz band, the action could start to pick up in the 1800MHz band. However, prices are unlikely to appreciate sharply since there is enough spectrum to go by for most operators.

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