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4G Spectrum Auction: 37% of spectrum on offer sold, bids exceeded govt expectations

As per a report by ICICI Securities, the operators have to make upfront payment of Rs 276 billion in the next 10 days; and two years’ moratorium and then 16 annual installments with 7.3 percent interest rate.

March 03, 2021 / 04:11 PM IST
Representative image: Reuters

Representative image: Reuters

The final results of the telecom spectrum auction that concluded on March 2 revealed that the government has managed to mop up only a quarter of its target of Rs 3.92 lakh crore by auctioning spectrum across 7 bands.

The government, on March 2, wrapped up the auction for the 4G airwaves by receiving bids for worth Rs 77,814.80 crore.

The auctions were conducted at a time when the COVID-19 pandemic has hit tax and other sources of revenue of the government.

While the proceeds from the spectrum sales dwarfed the analyst estimates of Rs 55,000-Rs 60,000 crore the revenue from spectrum, sales still turns out to be significantly lower than the government's target.

Reliance Jio emerged as the biggest buyer by acquiring a total of 488.35 MHz of spectrum for Rs 57,122.65 crore, followed by Bharti Airtel with 355.45 MHz at Rs 18,698.75 crore, and Vodafone Idea with 11.80 MHz for Rs 1,993.40 crore.

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The government had however said that the spectrum auctions 2021 were a success and had exceeded their expectations.

Telecom Secretary Anshul Prakash on March 2 said, "“Given the Covid scenario and other stress situations which the sector might be facing we had anticipated, that spectrum which will be sold will be about Rs 45,000-50,000 crores. So, what has actually happened is that it has far exceeded our expectations. And we are very happy that the industry is sanguine and confident. And it has bid to acquire more."

Having generated bids worth Rs 77,146 crore on day 1 of the auction, Union communications minister Ravi Shankar Prasad on Monday said that the bids had exceeded the government's expectations of Rs 45000 crore.

Out of 2308.80 MHz of spectrum put on auction, 855.60 MHz of spectrum found bidders totalling Rs. 77,814.80 crore. It means that only 37.06 percent of the total bids put on offer was sold.

The secretary had also noted that the 2021 auctions were in line with the previous ones. In 2016, only 12 percent of the spectrum on offer was sold while in 2013 it was only 7 percent, in 2012, it was only 19 percent and 2010, it was only 60 percent.

The Telecom Secretary on March 1 had said that with the spectrum auction, the Union government expected a revenue of Rs 12,000-13,000 crore in FY21 from the three private telecom players that bid in the auctions.

Reliance Jio in its statement said that it will make an upfront payment of Rs 19,939 crore before March 31, 2021.

"The spectrum auction results have exceeded ICRA’s earlier estimates and have fetched the exchequer around Rs 77,800 crore of which around Rs. 28,000 crore will have to be paid upfront. Of this amount, some proportion will have to be paid in FY2021 while the balance will be spilled over to FY2022, depending on spectrum availability," said Ankit Jain, Assistant Vice President, ICRA Ltd.

As per a report by ICICI Securities, the operators have to make upfront payment of Rs 276 billion in the next 10 days; and two years’ moratorium and then 16 annual installments with 7.3 percent interest rate.

The results of the spectrum auctions of 2021 have turned out to be similar to the last spectrum auctions which the  DoT  conducted  in FY17 with a base price target of Rs 5.63 lakh crore and had managed to raise around Rs 65,000 crore. The government had then put to auction 2,355 MHz of spectrum and had sold 965 MHz across seven bands.
Shreeja Singh
first published: Mar 3, 2021 04:11 pm

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