5G spectrum auction: Day 4 sale at Rs 232 crore; bidding to continue
On the fourth day of the ongoing spectrum auction, the government earned an incremental revenue of Rs 232 crore. The bidding continues as telcos are engaged in a race for spectrum in the 1800 MHz band in just one circle: Uttar Pradesh (East). The 1800 MHz band is meant mostly for 4G services.
After 23 bidding rounds, with seven on Friday, the government’s total revenue from the auction has touched Rs 149,855 crore. The bidding will resume on Saturday.
The price of the spectrum increased by more than 44.8 per cent over the base price of Rs 18.65 crore per block (each block of 0.2 MHz). And the demand continued to be in excess of supply, like it was on Thursday, with telcos collectively bidding for 75 blocks while the availability remains at 54.
While the government was able to rustle up a final bid amount of Rs 145,000 crore on day one in four rounds, it added only Rs 4,855 crore in the next three days after additional 19 rounds. In the last two days, the revenue has gone up by just Rs 401 crore.
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Analysts say that the war will end if one of the players blinks. The telcos have made a total demand for 15 MHz of spectrum. This is much more than what is available (10.8 MHz). The excess demand is for 4.2 MHz, based on the numbers.
With 16 MHz of spectrum in 1800 MHz band in the UP (East) circle, Bharti Airtel is clearly looking to hit the 20 MHz mark, say analysts. They point out that Reliance Jio, with 10 MHz, might be wanting to double its spectrum. Even Vodafone Idea, with 10 MHz, may be in the race for the same in this circle.
Despite the auction hitting the fifth day, the price of the 1800 band in UP (East) at Rs 135.09 crore per MHz is still cheaper than the reserve price in the 2021 auction, experts explain. It was at Rs 153 crore a MHz then. So there may be a lot of action still left.
From the operators’ perspective, UP (East) for Bharti accounts for a substantial 10.2 per cent of its total subscriber market share. Bharti is ahead of Reliance Jio in the circle. However, it accounts for 7.6 per cent of Bharti’s overall revenue share. In the case of Jio, which is number two in the circle, it accounts for 8 per cent of its overall subscriber base and 7.19 per cent share of its revenues. For Vodafone Idea, however, it accounts for 7.82 per cent of its overall subscriber base but only 4 per cent of its overall revenues.
Except in UP (East), the base price in these auctions is equivalent to the market price, prompting industry stakeholders and analysts to point at a ‘’faulty’’ structure. This is mainly due to the steep base price.
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