The government received bids worth Rs 450 billion on the second day of the spectrum auction. On the first day of the auction, the government had received bids worth Rs 399 billion.
Further, the reserve price of spectrum in the Delhi and Mumbai circles increased. The reserve price of spectrum in the 900 MHz band increased on an average of 54.2 per cent over the reserve price set by the government. However, the demand for spectrum in the 900 MHz tapered in the Delhi and Mumbai circles as operators stayed away from aggressive bidding at higher prices in the last few rounds. The average price of the spectrum in the 900 MHz band increased by 15.5 per cent at the end of the second day of the auction, compared to the first day.
While demand for spectrum in the 900 MHz declined in the Delhi circle to only 7 MHz (aggregate demand), the base price of spectrum increased by 23.7 per cent during the second day of the auction as against the first day. The Mumbai circle witnessed the highest increase in the reserve price of spectrum. At the end of the second day of bidding, the reserve price in the Mumbai circle increased by 68.5 per cent. The demand for spectrum in the Kolkata circle declined from 14 MHz of spectrum to 12 MHz of spectrum. The reserve price of spectrum in the circle increased by five per cent from the first day?s provisional reserve price in the circle, while the total increase in reserve price stood at 46.5 per cent as against the original base price set by the government.
The demand for additional spectrum in the 1,800 MHz band was only in two circles, Gujarat and Uttar Pradesh (West). However, the reserve price of spectrum increased in the two circles as compared with the original reserve price. In Gujarat, the reserve price of spectrum increased by 18 per cent, followed by Uttar Pradesh (West) by 14.2 per cent, Bihar by 7.9 per cent, West Bengal by 4.2 per cent and Assam by 1.4 per cent.
On the third day of the bidding scheduled for February 5, 2014, the government would invoke the ?100 per cent activity clause? This would mean that the operators will have to bid all their points on the basis of the earnest money they paid ? a few of the operators had been holding back so far, to use the points later. Industry experts are of the view that the actual demand for spectrum will be reflected following the introduction of ?100 per cent activity clause.?
In case the entire spectrum put up for bidding gets auctioned in the 900 MHz band along with significant amount of spectrum in the 1,800 MHz band, then the government is expected to garner revenues worth Rs 445 billion based on the provisional reserve price on the day of the auctions. Therefore, the revenue earned by the government from the auctions will be 17 per cent higher than the value of the entire spectrum to be auctioned at the reserve price. As operators will pay spectrum fees in installments mode, the government is likely to earn revenues worth Rs 130.84 billion as against its budgeted target of Rs 113.43.
