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The government will take a call on 700 MHz band, in case it remains unsold, Prasad

India’s first auction of spectrum in five years attracted Rs 77,146 crore of bids on the opening day on Monday with Reliance Jio Infocomm Ltd., Bharti Airtel Ltd., and Vodafone Idea Ltd. participating in the bidding process – a response that the government said was better than expected.

There were, however, no takers for spectrum in 700 MHz and 2500 MHz bands on the first day, and the auctions will continue and conclude on Tuesday.

About 2,308.80 MHz of spectrum, that carry telecom signals, in seven bands worth nearly Rs 4 lakh crore at the reserve or start price, was offered for bidding in the auction that began on Monday.

Communications Minister Ravi Shankar Prasad said Rs 77,146 crore worth of spectrum was bid on the first day but there were no takers for the airwaves in the premium 700 MHz as also 2500 MHz bands.

The response from players and the bids received surpassed government’s internal estimates, which had anticipated bids worth Rs 45,000 crore. “The winning bids that have come till 6 p.m. today is Rs 77,146 crore. We thought since there are only three players, and spectrum replacement is happening…our estimation was that the bids will touch about Rs 45,000 crore, but it is a matter of assurance that it has gone as high as Rs 77,146 crore,” Prasad said.

The bidder-wise details were not available immediately. A total of 2,308.80 MHz spectrum is being put to auction, out of which there have been bids for 849.20 MHz so far, an official release said.

Bids were received in 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz bands, as players gave the prized 700 MHz band a miss on the first day of auctions.

“Total value of spectrum put to auction was about Rs 4 lakh crore. In this, 700 MHz band was a costly band, and that cost itself is Rs 1.97 lakh crore,” the minister said adding that the government will take a call on 700 MHz band, used for 5G, in case it remains unsold in the ongoing auctions.

Excluding 700 MHz and 2500 Mhz bands, the bidding accounted for 60 per cent of the spectrum that was put to auction.

The 700 MHz band went unsold during the 2016 auctions, too. During 2016, when there were seven bidders, the spectrum sold was 41% by quantity and 12% by value of the total spectrum put to auction. The corresponding figures in the 2021 spectrum auction so far are 37% and 19% respectively, with three participants.

Spectrum will be offered for assignment for a validity period of 20 years. Successful bidders can pay entire bid amount in one go (upfront), or exercise an option to pay a certain amount (25% for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50% for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront with remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years. The government will get Rs 12,000-13,000 crore in the current financial year and nearly the same amount is expected in the next fiscal.

“Not only from Government’s revenue point but also customer point of view, it assures us that more spectrum which has been bid, will lead to better services,” Prasad said. The first day of auctions saw four rounds, first two rounds at 80% activity levels and thereafter at 90% activity levels.

Asked which players had bid aggressively, the minister said that the government has consciously devised a mechanism where it keeps away from the auction process while the bidding is on, and e-auctioneer conducts the process in the most transparent manner.

On about future course for 700 MHz band, where players have maintained that prices are exorbitantly high, Prasad said, “the legal requirement is that once there is no auction in a band, Government will have to go to TRAI for recommendation of fresh price.”

The auction is being held in the backdrop of the pandemic which has impacted economic activity, he said.

“There was a stress we cannot deny that, and in spite of that the auction is showing encouraging results. This is an assurance,” Prasad said.

The auctions for 5G spectrum “should happen in the next financial year”, Telecom Secretary Anshu Prakash said noting that many of the companies may have also set aside some reserves for 5G auctions.

India would like to have a robust 5G mechanism in place, and would encourage innovative Made-in-India products by domestic companies. “Very soon, we will be coming up with a good ecosystem for 5G trials as well. As far as spectrum is concerned, we will make proper announcement at an appropriate time, and it will not be very late,” Prasad said.

On whether or not Chinese vendors will be allowed to participate in 5G, the minister said the norms are already in place and the government will proceed accordingly to the rules laid down.

In the 800 MHz, spectrum sold was 65 per cent, in 900 Mhz (38%), 1800 MHz (41%), 2100 MHz (9%), and 2300 MHz (89%).

“Although in 800 MHz, the spectrum sold is 65% of what is available, contribution of this band to total kitty is about 50% so it is more expensive,” Prakash said. Bloomberg

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