9.9.15

FM Auctions update

It would look like the government has made a killing on the FM auctions.It expected to get Rs.550 crore from batch 1 of the auctions but has netted more than Rs.1,175 crore. On top of this, it will collect another Rs.1,880 crore in renewal fees from existing broadcasters. So should it uncork the bubbly?
The high collections have come mostly from the top three metros -almost 45% from just four frequencies in New Delhi (1), Mumbai (2) and Bangalore (1). If Chennai (1), Hyderabad (4), Ahmedabad (1) and Pune (2) are added, the figure rises to nearly 66%. On the other hand, some 38 frequencies, mostly in smaller towns, have gone unsold. If this pattern continues into batch 2, when more than 830 frequencies in 250+ small towns are to be auctioned, the government may have a lot to worry about.
As a result of a high reserve price, temple town Tirupati (reserve price Rs.4.5 crore) found no bidders. Ditto Vijaywada (Rs.7 crore), and many others. Second, there was a completely inexplicable `national cap' of 15% imposed on bidders -limiting their ownership to 52 frequencies nationally . Big broadcasters found their expansion plans severely curtailed. Had this cap not been there, many of the unsold frequencies could have been sold.

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