2G spectrum: Players pulling out as price continues to rise

The government may face a challenge as the spectrum auction heads into its third day. After the second day of auction, the total value that government will garner for the spectrum has fallen to Rs 41,008.7 crore. With 1800 Mhz getting bids worth Rs 24,970 crore while 900 Mhz getting bids worth Rs 16,039 crore.The government will be getting approximately Rs 12,250 crore as upfront payment from the auction. As price bids increase players are re-strategising their options and the 900 Mhz is witnessing a major action. Mumbai circle, which witnessed excess demand of 5 Mhz on Monday, saw the excess demand dwindle to just 1 Mhz, while the price has risen by 68.3 percent above reserve price. This has led to shift in bidding for the 1800 Mhz spectrum.

Also Read: Demand suggests we got the price right, says KhullarDelhi is seeing a negative demand of 9 Mhz, while Kolkata is seeing negative demand of 2 Mhz. Price for Delhi has risen by 50.4 percent above reserve price, while that for Kolkata it has risen by 54.2 price.The excess demand in the 900 Mhz Mumbai spectrum has shifted to 1800 Mhz. The circle has seen additional demand of 3.4 Mhz, while the price has remained at reserve price. UP West is another circle, which is seeing some demand. There is a surplus demand of 9 blocks. It saw additional bids for 3.6 Mhz.    Gujarat is also another circle were the price bid has led to demand declining. The bid price per block is 18 percent above reserve price while the circle has seen some withdrawal.Among the other circles, demand for Assam has fallen by 4.6 Mhz, while it fell by 7.6 Mhz in Delhi in the 1800 Mhz band. Delhi has seen increase in price as compared to yesterday.At the end of day 2, there is likelihood that one player bidding for 900 Mhz in Mumbai shifted to 1800 Mhz.Only 64.2 percent of 1800 Mhz supply has been covered so far, this coverage stood at 66 percent on Day 1. While for the 900 Mhz, the coverage has fallen to 80.4 percent as against 108.7 percent on Monday.Clearly, it seems the auction is not likely to get over by the end of the week, unless all players opt to step back from bidding aggressively.