Spectrum auction nets over Rs 14,000 crore as deposits by telecom companies

A collective sum of Rs 14,653 crore has been deposited by seven leading telecom operators for the largest ever spectrum auction slated to begin on October 1.

On Monday, the telecom companies, including Reliance Jio, Bharti Airtel, Idea Cellular and Vodafone, were granted permission by the department of telecommunications (DoT) to place their bid for any spectrum band in any of the 22 telecom circles in India. 

The government has put up 2,354.55 MHz of spectrum for auction, which, at its reserve price, is valued at Rs 5.66 lakh crore. Industry sources say spectrum worth around Rs 80,000 crore is likely to be sold in the upcoming auction.

In descending order, the maximum Earnest money deposit (EMD), which is indicative of a company's strategy to bid for specific bands and in specific circles, of Rs 6,500 crore was submitted by Jio, followed by Vodafone India who submitted EMD of Rs 2,740 crore. Idea Cellular and Bharti Airtel submitted EMD of Rs 2,000 crore and Rs 1,980 crore, respectively. They, however, may be exempted from bidding for the 700-MHz band.

In the lower rung, Tata Teleservices has submitted an EMD of Rs 1,000 crore, while the corresponding figures for Reliance Communications and Aircel are Rs 313 crore and Rs 120 crore, respectively. Based on consideration given to the net worth of promoters, Tata Teleservices will be eligible for bidding for all bands in Mumbai and Maharashtra circles.

However, restrictions remain for certain bandwidths. For instance, for the 800-MHz band, Tata Teleservices cannot bid in Assam and the North East and for 900 MHz and 1,800 MHz, it cannot bid in Assam, Delhi and the North East. Similarly, Reliance Communications can bid in any service area, except Assam and the North East. Aircel can't bid in any circle in 700-MHz, 800-MHz and 2,500-MHz bands. For the remaining bands, it can bid in select circles.

With large chunks of spectrum put up for sale by government in the latest auction, the industry expects an improvement in service quality, as it will help in removing fragmentation. Including proceeds from spectrum auction and other fees levied by DoT,  the government expects revenue of Rs 98,995 crore from communication services in 2016-17.