26.3.15

Spectrum Sale...a bonanza for the Government


The government raked in a record bounty of nearly Rs.1.1 lakh crore through a fiercely contested spectrum sale, which lasted 115 rounds and was spread over 19 days as telecom heavyweights such as Bharti Airtel, Vodafone and Idea Cellular and Reliance Jio, the cash-laden newcomer owned by billionaire Mukesh Ambani, fought to bag a 20-year control over the airwaves.
The auctions ran under the shadow of a Supreme Court order that prohibited the government from revealing the details about the winners till the time it disposes off a series of petitions that have challenged the sale process. The apex court hears the matter on Thursday and the list of winners, the amount they spent, and the circles where they bagged the spectrum will only be known after that.
While there are no confirmed numbers, Idea Cellular and Bharti Airtel are said to have spent around Rs.28,000 crore each, while Vodafone may have spent around Rs.30,000 crore and Reliance Jio close to Rs.10,000 crore. There is no official confirmation from the companies or the government on this and final figures can vary .
The fresh auctions happened nearly a year after the government bagged a little over Rs.61,000 crore through a similar sale in February 2014. The mop-up from the latest round of auction gave finance minister Arun Jaitley the ammunition to take a dig at former telecom minister Kapil Sibal, who had said that there was `zero loss' from the 2007 2G licence allotment.


Aditya Birla group company Idea Cellular, which had the most crucial spectrum holdings at stake in the auction, paid the maximum amount of Rs.30,307 crore -more than a quarter of the overall spectrum receipts by the government -to maintain continuity of business. Bharti Airtel, the largest telecom operator of the country , paid Rs.30,000 crore.
The auction, which has made the government richer by nearly Rs.1.1 lakh crore (nearly Rs.29,000 crore will flow in over the next 10 days as part of the first tranche), saw the top telecom operators fight it out to retain the highly-efficient 900-MHz spectrum in key bands to maintain operations and infrastructure.
The companies will have a 20-year control over the spectrum -spread over four frequencies -and the airwaves can be used to launch a variety of services, including the data intensive 3G and 4G offerings.
Vodafone, the country's second-biggest operator, paid Rs.25,960 crore. Together, the top three telcos contributed nearly 80% to the government's auction kitty .
Mukesh Ambani's Reliance Jio was the fourth biggest spender with Rs.10,000 crore as the company bought 48.75 MHz in the 800-MHz band and 28 MHz in the 1,800 MHz band. It plans to launch 4G services across three frequencies -800 MHz, 1,800 MHz and 2,300 MHz.
“Jio's seamless 4G services using proven multi-band LTE technology and supported by our large spectrum footprint will provide superior user experience for voice, video and data services in line with the best service providers in the world,“ Mukesh D Ambani, chairman and MD of Reliance Industries, said.
This spectrum auction was crucial for the top operators.Idea was fighting to retain 900 MHz spectrum in nine service areas, which contribute 73% of its mobile revenues, Airtel in six service areas (35% of revenues), Vodafone in six service areas (38%), and Reliance Communications in seven circles (32%).
“Including this auction and November 2012 spectrum auction, Idea has managed to acquire renew new licenses with liberalized spectrum for 16 out of the 22 Service Areas, which is among the highest for any telecom operator. The company has next renewal of only four service areas in the year 2021 and remaining two service areas as late as 2026,“ the company said.
Tata Teleservices was a surprise buyer in this round as the struggling telco spent Rs.7,851 crore to bag spectrum in the 800-MHz and 1,800-MHz bands.


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