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Top 3 Mobile Operators Spend Rs 86K Cr In Auction

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Aditya Birla Group firm Idea was the most aggressive bidder, followed by Sunil Bharti Mittal's Airtel and UK's Vodafone in the fiercely contested spectrum auction that Telecom Minister Ravi Shankar Prasad on Thursday (26 March) insisted will not result in increase in call rates.

Of the record Rs 1,09,874.91 crore received in the 19-day auction that concluded yesterday, the government will get Rs 28,872.7 crore within 10 days but Prasad wanted the telecom operators to pay the upfront money within six days to help the government meet its budget targets of the 2014-15 fiscal.

The three operators bought airwaves worth a total Rs 85,575 crore ($13.6 billion), or about 78 per cent of the total airwaves sold in the auction, telecoms minister Ravi Shankar Prasad said on Thursday (26 March)

The heavy bidding by the large operators underscores their big bets on the potential for mobile data in the world's fastest growing smartphone market.

"I would very earnestly appeal to the companies that national revenue is equally important for growth and India's image," the minister said, appealing to winning bidders to submit initial payments before the current fiscal year ends on March 31.

Spectrum revenue is crucial for the government to meet its ambitious fiscal target. The winners have until April 4 to make the upfront payment.

Idea Cellular, India's third-biggest mobile operator by market share, spent Rs 30,306 crore in the auction, the single biggest amount spent.

Market leader Bharti Airtel paid Rs 29,310 crore, while Vodafone Group India unit spent Rs 25,959 crore, according to figures provided by the minister.

Mukesh Ambani's cash-rich Reliance Industries' telecoms unit spent Rs 10,077 crore before a widely anticipated commercial launch later this year.

His younger brother Anil's Reliance Communication also bid in the same bands but walked way with lesser spectrum for Rs 4,299.13 crore.

While Norway's Telenor was the only company out of the 8 that participated in the auction but did not to win any radiowaves. Tata Teleservices bought Rs 7,851.33 crore of spectrum in 800 MHz and 1800 MHz. Aircel will pay Rs 2,250 crore to buy spectrum in 1800 MHz band.

"In the 2010 spectrum, we collected Rs 1.06 lakh crore but against that there was a Rs 30,000 crore share of BSNL and MTNL against the auction allocated to them earlier. This time there is no component of BSNL and MTNL. Therefore, it is the highest in the history of Indian telecom," Prasad told reporters in New Delhi.

He further said: "The first instalment is to be payed in 10 days at outer limit. We still have six days in this financial year. National revenue is equally important and the image of the country. I will appeal to all the bidders to pay by March 31."

The minister countered industry experts terming auction determined spectrum as very high that will lead to hike in mobile call and other services rates.

"I am seeing a huge campaign that mobile rates will go up. A person very familiar with telecom industry has given me analysis. The spectrum will be with operators for 20 years. As per the analysis, the yearly load on telecom operators is going to be about Rs 5,300 crore...and 1.3 paise per minute call," he said.

The spectrum was sold at about 68 per cent premium, for Rs 1,09,874.91 crore. At the base price fixed by the government, its value was Rs 65,463.40 crore.

About 11 per cent remained unsold which also included 800 Mhz, 1800 Mhz and 2100 Mhz (3G) bands.

"I believe when entire regime is conducted in fair and transparent manner, people do trust. I would like say one thing to my esteemed predecessor who talked about zero loss that if they would have done what I have done they would have got same result," Prasad said.

The minister added that before the start of the auction there was campaign against the Department of Telecom that despite telecom regulator TRAI's recommendation very little spectrum is being put for auction.

"My Department was particularly singled out for 2100 Mhz that you ought to have taken 15 Mhz additional. I was criticised for that. We have offered 85 Mhz in 2100 Mhz band of which 15 Mhz in three place remained unsold. Therefore, we were right," Prasad said.

All the companies willingly participated in the spectrum auction which went on for 21 days and succeeded because the rules were clearly laid down before the process started, he added.

The minister said this spectrum auction has been most successful of all since 2012.

"In this auction, about 89 per cent of total spectrum put for auction got sold," Prasad said.