Indian Telecom Spectrum Auction

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In India, the Department of Telecommunications (DoT) conducts auctions of licenses for electromagnetic spectrum. India was among the early adopters of spectrum auctions beginning auctions in 1991. Despite the early start, services were slow to roll out caused by unforeseen problems with the design and rules of the auction.[1] Potential service providers were required to seek foreign partners, as the DoT felt that no Indian company alone had the financial means to enter the industry. Bidding for all licenses required a two stage screening process.

2010 Spectrum Auction[edit]

In 2010, 3G and 4G telecom spectrum were auctioned in a highly competitive bidding. The winners were awarded spectrum in September, and Tata Docomo was the first private operator to launch 3G services in India.[2] The Government earned INR677.19 billion (US$11 billion) from the 3G spectrum auction. While the broadband wireless spectrum auction generated a revenue of INR385 billion (US$6.4 billion). The Government earned a total revenue of over INR1062.19 billion (US$18 billion) from both auctions.

Participants[edit]

The private companies which participated in the auction were:

Apart from the above state-owned BSNL and MTNL were also awarded spectrum, although they did not participate in the auction. Both these state-owned operators were given a head start by the government in the 3G space by allotting the required 3G spectrum, on the condition that each would pay an amount which would be equivalent to the highest bid in the respective service areas as and when the 3G auctions took place. [3] BSNL paid the Indian government INR101.87 billion for spectrum in all 22 circles it operates in. State-owned MTNL provides 3G services in the other 2 circles – Delhi and Mumbai. [4]

Results[edit]

The auction took place over 34 days and consisted of 183 rounds of bidding. The most expensive telecom circle was Delhi at a price of INR3,316.94 crore per operator. The five most expensive circles were Delhi, Mumbai, Karnataka, Tamil Nadu and Andhra Pradesh. They accounted for 65.56% of the total bids.[4][5]

Circle / Operator Vodafone Airtel Reliance Tata Idea Aircel S Tel BSNL MTNL Total
Andhra Pradesh N YesY N N YesY YesY N YesY N 4
Assam N YesY YesY N N YesY N YesY N 4
Bihar N YesY YesY N N YesY YesY YesY N 5
Delhi YesY YesY YesY N N N N N YesY 4
Gujarat YesY N N YesY YesY N N YesY N 4
Haryana YesY N N YesY YesY N N YesY N 4
Himachal Pradesh N YesY YesY N YesY N YesY YesY N 5
Jammu & Kashmir N YesY YesY N YesY YesY N YesY N 5
Karnataka N YesY N YesY N YesY N YesY N 4
Kerala N N N YesY YesY YesY N YesY N 4
Kolkata YesY N YesY N N YesY N YesY N 4
Madhya Pradesh N N YesY YesY YesY N N YesY N 4
Maharashtra & Goa YesY N N YesY YesY N N YesY N 4
Mumbai YesY YesY YesY N N N N N YesY 4
North East N YesY YesY N N YesY N YesY N 4
Orissa N N YesY N N YesY YesY YesY N 4
Punjab N N YesY YesY YesY YesY N YesY N 5
Rajasthan N YesY YesY YesY N N N YesY N 4
Tamil Nadu YesY YesY N N N YesY N YesY N 4
Uttar Pradesh (East) YesY N N N YesY YesY N YesY N 4
Uttar Pradesh (West) N YesY N YesY YesY N N YesY N 4
West Bengal YesY YesY YesY N N YesY N YesY N 5
Total 9 13 13 9 11 13 3 20 2 93

2012 Spectrum Auction[edit]

In 2012, the DoT auctioned 2G spectrum in both GSM and CDMA bands. The government put on sale 271.25 MHz of spectrum.[6] The 1800 MHz band and 800 MHz band are currently being used for GSM and CDMA services respectively. Eleven blocks having 1.25 MHz each in the 1800 MHz frequency band were auctioned, except in Mumbai and Delhi where only eight blocks were available. Three of the eleven blocks, in each circle, were reserved or new telecom players for operators whose licences were cancelled by the Supreme Court on 2 February 2012, following the 2G spectrum scam. New players and companies affected by the Supreme Court verdict will have to win at least 4 blocks in each circle to start or continue their operations in that circle. Existing players whose licences were not affected by the Supreme Court verdict can bid for only 2 blocks in each circle. This applies to all circles of Airtel and Vodafone, and in some circles for Idea.[7]

Three blocks of 1.25 MHz frequency each in the 800 MHz band were also available for auction.[8] Initially, only Videocon Telecommunications Limited and Tata Teleservices (Tata DoCoMo CDMA) had applied to participate in the auction for spectrum in 800 MHz band (CDMA). Both companies withdrew their applications before 5 November, the last date for withdrawal of applications. Videocon was announced as a pre-qualifier in the bidding process by the DoT on 29 October, but withdrew its application on 2 November.[9] Tata Teleservices was also announced as a pre-qualifier on 29 October, but withdrew its bid later. The withdrawals meant that there were no bidders left and the CDMA spectrum auction was subsequently cancelled.[10]

The final list of bidders was announced on 6 November. This was followed by a mock auction on 7 and 8 November and the e-auction of 1,800 MHz band began on 12 November.[11]

Participants[edit]

The companies which participated in the auction for spectrum in 1800 MHz band (GSM) were:

Results[edit]

The auction took place over 2 days (starting 12 November and ending 14 November) and consisted of 14 rounds. The government received bids worth a total of INR9407 crore (US$1.6 billion), far lower than its target of INR280 billion from the sale of 2G spectrum in the GSM band. None of the bidders bid for a pan-India spectrum for which the reserve price was set at Rs140 billion for 5 MHz of airwaves.[12] Out of the 140 blocks of spectrum on offer, 102 got bids. Delhi, Mumbai, Karnataka and Rajasthan circles did not receive any bids. When asked about the government's plans for spectrum that remained unsold in the 2G auction, Minister of Communications and Information Technology Kapil Sibal said, "Of course there will be an auction. There is no doubt about that. What procedure we follow for that auction is something that we will decide in another few weeks."[13][14]

Circle / Operator Vodafone Airtel Uninor Idea Videocon
Assam YesY YesY N YesY N
Andhra Pradesh N N YesY N N
Bihar YesY N YesY YesY YesY
Delhi No bid
Gujarat YesY N YesY N YesY
Haryana YesY N N N YesY
Himachal Pradesh YesY N N N N
Jammu & Kashmir YesY N N YesY N
Karnataka No bid
Kerala YesY N N N N
Kolkata N N N YesY N
Madhya Pradesh YesY N N N YesY
Maharashtra & Goa YesY N YesY N N
Mumbai No bid
Punjab YesY N N N N
North East YesY N N YesY N
Orissa YesY N N YesY N
Rajasthan No bid
Tamil Nadu N N N YesY N
Uttar Pradesh (East) YesY N YesY N YesY
Uttar Pradesh (West) YesY N YesY N YesY
West Bengal YesY N N YesY N
No. of Circles 15 1 6 8 6
Total Amount (INR crores) 1,127.94 8.67 4,018 2,031 2,221

2013 Spectrum Auction[edit]

In 2013, the DoT auctioned 2G spectrum in GSM (1800 MHz) and CDMA (800 MHz) bands. The Government decided to sell airwaves in Delhi, Mumbai, Karnataka and Rajasthan for 1800 MHz band, and pan India for the 800 MHz band. The Government also announced that it would auction the unsold spectrum in the 1800 MHz band from the 2012 spectrum auction, immediately after the first round, which began on 11 March, got over in order to comply with a Supreme Court order. The government reduced the reserve price for 1800 MHz by 30% and for 800 MHz by 50% from the 2012 spectrum auction.[15][16] The Government had planned to auction airwaves in Delhi, Mumbai and Kolkata for 900 MHz band simultaneously with the 1800 MHz band. But, it was not able to finalise the auction for the 900 MHz band as incumbent operators had moved the Delhi High Court, seeking its intervention to stop the auction of the 900 MHz bandwidth, after they failed to get a response from the DoT on their plea for renewal of licences for the 900 MHz spectrum band which they had bought in November 1994.

In total, the Government planned to auction 50 MHz of airwaves in the 1800 MHz band and 76.25 MHz of spectrum in the 800 MHz band in the 2013 spectrum auction.[17] The Government put CDMA spectrum worth INR64 billion (US$1.1 billion) up for auction[16][18] and fixed the price of 900 MHz, two times higher than 1800 MHz.[19] DoT issued notice inviting applications for spectrum auction on 30 January 2013, and the last date for submitting an application was 25 February 2013.[20] The auction for all three bands was planned to begin on 11 March 2013. However, no bidders expressed interest in the 1800 MHz and 900 MHz bands and as a result, the auction for those bands was postponed indefinitely. The auction for spectrum in 800 MHz band proceeded as planned on 11 March.[21]

Response to the 2013 spectrum auction was poor. While there were no bidders for spectrum in 1800 MHz and 900 MHz bands, MTS India was the only bidder for airwaves in 800 MHz band. Airtel and Idea were reluctant to participate in the spectrum auction due to steep pricing of the auction airwaves, and also because of their debt levels and weakening cash flow.[22] Vodafone Group's CEO Vittorio Colao stated, "The problem is that in India there is a misperception of what is the value of spectrum. The reserve prices are set too high. India has very low prices and very low revenues so we cannot afford to pay high price for spectrum. We have told them [Indian government] a number of times that the order of magnitude that they have in mind just does not make sense". He felt that the government needed to take clear and simpler views about the benefits that would come from lower value of spectrum.[19]

Results of the 2013 spectrum auction
Circle Price per block
Delhi INR4504.9 million (US$75 million)
Gujarat INR1461.5 million (US$24 million)
Karnataka INR2145.8 million (US$36 million)
Kerala INR424.5 million (US$7.1 million)
Kolkata INR739.2 million (US$12 million)
Maharashtra & Goa No bid
Mumbai No bid
Tamil Nadu INR1989.6 million (US$33 million)
Uttar Pradesh (East) No bid
Uttar Pradesh (West) INR698.2 million (US$12 million)
West Bengal INR167.9 million (US$2.8 million)

Participant[edit]

The sole bidder in the auction was Sistema Shyam TeleServices Limited (SSTL), under the brand name MTS, who bid for spectrum in the 800 MHz band.

Results[edit]

The auction was held on 11 March and lasted little over 4 hours.[23] Auction rounds were scheduled to begin between 0900 hrs and 1900 hrs IST.[16] The auction ended in three rounds with lone bidder SSTL putting in bids at the minimum bid price. Sistema Shyam TeleServices Limited (SSTL), under the brand name MTS, won telecom spectrum in 8 circles for INR36.39 billion (US$610 million).[24] In all, 24 blocks (of 1.25 MHz of spectrum each) in 8 telecom circles were allocated out of 61 blocks that were put for auction. Approximately, 40% of the spectrum that was put for auction and 56% of the value of spectrum put for auction was sold.[25]

SSTL bought 3 blocks each in Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal telecom circles.[26] SSTL did not bid for the other 3 circles where spectrum was being auctioned – Mumbai, Maharashtra and Uttar Pradesh (East) circles.[27] The terms of the auction include payment of 25% of the final bid amount by SSTL to the Government within 10 days, followed by a payment moratorium until March 2016.[28] The Government will not get any upfront payment from the auction as INR16.58 billion (US$280 million) has to be adjusted against the licence fee SSTL had already paid in 2008. Therefore, SSTL will have to pay around INR20.13 billion (US$340 million) for the spectrum, of which 25% of the total bid amount (approximately INR5032.5 million (US$84 million)) would be paid within 10 days, followed by a payment moratorium until March 2016, after which the balance amount would be paid in 10 equal annual instalments of INR2013 million (US$34 million).[29]

The table on the right shows the prices per block for each of the 11 telecom circles in which spectrum was put up for auction. The participant in the auction, MTS, won spectrum in 8 circles and did not bid for 3 circles. No spectrum was put up for auction in the remaining circles of India.[30]

2014 Spectrum Auction[edit]

In 2014, the Dot auctioned 2G telecom spectrum in the frequency range of 900Mhz and 1800 MHz. The winners were awarded spectrum in February. The Government earned INR611.62 billion (US$10 billion) from the spectrum auction. The 1800 MHz spectrum auctioned were cancelled by the Supreme Court, following the 2G spectrum scam. The government put on sale 307.2 MHz of 1800 and 46 MHz of 900 MHz-wide spectrum. The licences are valid for 20 years. Vodafone and Bharti were already using 900 MHz frequency and had to renew before their license expire in November 2014. Reliance Jio, the only company to have all-India 4G license entered into voice service and won in 14 circles in 1800 MHz frequency.[31] Companies also plan to provide 3G and 4G services on the spectrum.[32]

Participants[edit]

The private companies which participated in the auction were:

Results[edit]

The auction took place over 10 days and consisted of 68 rounds of bidding. The most expensive telecom circle in both 900 & 1800 MHz frequencies[33] was Delhi at a price of INR740.96 crore and INR72.80 crore per operator. Delhi and Mumbai together accounted for 57% of the total bids.[34]

900 MHz
Circle / Operator Vodafone Airtel Idea Total
Delhi YesY YesY YesY 3
Kolkata YesY YesY N 2
Mumbai YesY YesY N 2
Total 3 3 1 7
1800 MHz
Circle / Operator Vodafone Airtel Rel Jio Idea Aircel Uninor RCom Tata Total
Andhra Pradesh YesY YesY YesY YesY N YesY N N 5
Assam N N YesY N N YesY N N 2
Bihar N N N N N YesY N N 1
Delhi YesY YesY YesY YesY N N N N 4
Gujarat YesY N YesY YesY N N N N 3
Haryana YesY N N YesY N N N N 2
Himachal Pradesh N YesY N N N N N N 1
Jammu & Kashmir N YesY N N YesY N N N 2
Karnataka YesY YesY YesY YesY N N N N 4
Kerala YesY YesY YesY YesY N N N N 4
Kolkata YesY YesY YesY N N N N N 3
Madhya Pradesh N YesY YesY YesY N N N N 3
Maharashtra & Goa N N YesY YesY N N N N 2
Mumbai YesY YesY YesY YesY N N YesY N 5
North East N YesY YesY YesY YesY N N N 4
Orissa N YesY YesY N N N N N 2
Punjab YesY YesY N YesY N N N N 3
Rajasthan YesY YesY N N YesY N N N 3
Tamil Nadu N YesY YesY N N N N N 2
Uttar Pradesh (East) YesY N N N YesY YesY N N 3
Uttar Pradesh (West) N N N N N YesY N N 1
West Bengal N YesY YesY N YesY N N N 3
Total 11 15 14 11 5 5 1 0 62

Source:2014 Auction Provisional Results

References[edit]

  1. ^ Jain, R; R.S. (2001). "Spectrum auctions in India: Lessons from experience". Telecommunications Policy 25 (10–11): 671–688. doi:10.1016/S0308-5961(01)00047-7. 
  2. ^ "3G spectrum auction begins smoothly, top telecom operators in fray". The Times of India. 9 April 2010. 
  3. ^ "Impact of 3G auction on MTNL and BSNL". CXOtoday.com. 26 April 2010. 
  4. ^ a b "India's 3G Auction Ends; Operator And Circle-Wise Results". Medianama.com. 19 May 2010. 
  5. ^ Official results for 3G Spectrum Auctions: Department of Telecomm – Government of India
  6. ^ EGoM on 2G spectrum auction to meet tomorrow – Hindustan Times
  7. ^ "Four rounds on, response to spectrum auction remains muted – India – DNA". Dnaindia.com. 12 November 2012. Retrieved 2013-03-06. 
  8. ^ "DoT issues guidelines for spectrum auction". IBN Live. 28 September 2012. 
  9. ^ "Videocon Telecommunications Withdraws Bid for CDMA Spectrum". Telecom Talk. 2 November 2012. 
  10. ^ "Exclusive : Tata Teleservices Withdraws Bid for 800 Mhz CDMA Spectrum, No Taker For CDMA in India!". Telecom Talk. 5 November 2012. 
  11. ^ "DoT Issues Final List of Bidders For 1800 MHz GSM Spectrum Auction". Telecom Talk. 6 November 2012. 
  12. ^ "2G auctions flop as 57% of spectrum remains unsold; govt gets less than a quarter of its revenue target – Economic Times". Economictimes.indiatimes.com. Retrieved 2013-03-06. 
  13. ^ "2G spectrum auction flops; fetches a meagre Rs9,407 crore - NDTVProfit.com". Profit.ndtv.com. 15 November 2012. Retrieved 2013-03-06. 
  14. ^ Bafna, Sanjay. "India's 2G Spectrum Auction Ends, Operator And Circle-Wise List of Winners". Telecomtalk.info. Retrieved 2013-03-06. 
  15. ^ "1,800-MHz Spectrum Auction Gets Muted Response". Rttnews.com. 26 February 2013. Retrieved 2013-03-06. 
  16. ^ a b c 2G spectrum auction: Sistema Shyam Teleservices sole bidder in round 2 – The Times of India
  17. ^ "Telecom spectrum auction application process ends today". Business Standard. 25 February 2013. Retrieved 2013-03-06. 
  18. ^ Second round of spectrum auction from tomorrow, SSTL lone bidder – Economic Times
  19. ^ a b PTI 26 Feb 2013, 08.40 pm IST (26 February 2013). "Spectrum auction base price too high in India: Vodafone CEO – Economic Times". Economictimes.indiatimes.com. Retrieved 2013-03-06. 
  20. ^ "CDMA spectrum auction from March 11". Smetimes.in. 27 February 2013. Retrieved 2013-03-06. 
  21. ^ By R. Jai Krishna (26 February 2013). "India Postpones Part of Bandwidth Auction - WSJ.com". Online.wsj.com. Retrieved 2013-03-06. 
  22. ^ "March 2G spectrum auction in jeopardy as telcos keep distance – Mobile Phone | ThinkDigit News". Thinkdigit.com. 26 February 2013. Retrieved 2013-03-06. 
  23. ^ SSTL bags 8 circles in single-race CDMA spectrum auction – Mobile Phone | ThinkDigit News
  24. ^ Sistema Gets Spectrum in 8 India Service Areas – WSJ.com
  25. ^ Sistema Wins 2G Auction in 8 Circles for Rs 3,639 Cr | news.outlookindia.com
  26. ^ 2G auction fetches government `3,500 crore – Livemint
  27. ^ Sistema bags spectrum in eight circles for Rs.3,639 crore – The Hindu
  28. ^ Sistema wins spectrum in 8 circles for Rs 3,639 crore – Indian Express
  29. ^ Sistema gives 3 circles a miss in CDMA auction | Business Standard
  30. ^ Sistema Secures CDMA Spectrum In 8 Circles For Rs 3,639 Cr; Closing Down In 3 Circles – MediaNama
  31. ^ "2G spectrum auction nets Rs. 61,162 crore: 10 things to know". NDTV. 14 February 2014. 
  32. ^ "Spectrum auction sets stage for next round of telecom competition". Livemint. 14 February 2014. 
  33. ^ [1]
  34. ^ "India’s 2014 2G Auction Ends: Operator & Circle Results". MediaNama. 14 February 2014.