The day one of Spectrum Auction 2021 is now over and the DoT has released the bids it received so far today. Unlike what was expected, the government received winning bids worth Rs 77,146 crore from the three telecom operators who participated in the bidding today. The government expected bids of around Rs 45,000 crore, but telcos have exceeded the expectations in this auction. Airwaves sold in the 800 MHz band contribute to 50% of the generated revenues, said Union communications minister Ravi Shankar Prasad. 65% of the spectrum was sold in the 800 MHz band and 89% of 2300 MHz was sold on day one of spectrum auction. Similar to Spectrum Auction 2016, the 700 MHz band does not see any takers and the DoT says a legal approach will be taken on Trai, citing exorbitant pricing. The bidding will continue tomorrow, aka March 2.
Day 1 of Spectrum Auction 2021 Highlights
The 2021 Spectrum Auction is very different compared to the previous auctions. In 2016, we had seven bidders, but now, there are only three bidders- Reliance Jio, Bharti Airtel and Vodafone Idea. For the unaware, the government is auctioning spectrum across seven bands- 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz. The spectrum purchased by the bidders in this auction will be valid for 20 years.
Delving into the details, it is confirmed that the 800 MHz band is the show-stealer. The government has managed to sell 65% of the spectrum in the 800 MHz band that contributed to 50% of the generated revenue. Telcos in India are using spectrum in the 800 MHz band for 4G services.
Bidders acquired 89% of the 2300 MHz spectrum, which accounts for around 17% of the raised revenue. The government also sold 38% of the spectrum in the 900 MHz band, 41% in the 1800 MHz band and 9% in the 2100 MHz band. There are no takers for the 700 MHz band.
Keeping the 700 MHz and 2500 MHz bands aside, 60% of the spectrum put on auction has been sold. The Union Minister also said it would take legal action on Trai regarding the prices of the 700 MHz band.
As we reported earlier, the three bidders will be given the option to pay 50% of the amount upfront for bids placed in 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands. The remaining amount can be paid via over the next two years. Since the spectrum in 700 MHz, 800 MHz and 900 MHz bands is costly, an upfront amount of just 25% for every successful bid.
The auction will continue tomorrow, where we might see Reliance Jio bidding for part of the spectrum in the 700 MHz band.
