4G spectrum auction ends, Government nets Rs 77,800 crore

The government is believed to have generated Rs 77,800 crore from the 4G spectrum auction that got underway Monday and ended on Tuesday, the second day itself, making it one of the shortest such sales in recent times.

Despite the short sale, the government is expected to generate the second-highest proceeds after it had raised Rs 1,13,932 crore in the 2015 auctions, with Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea mostly bidding to renew airwave permits expiring from July. The auction lasted six rounds, said a person familiar with the matter.

But the auction proceeds were well below the Rs 3.92 lakh-crore of spectrum across seven bands put on sale. This was since, as widely expected, the 700 Mhz band – worth nearly Rs 2 lakh-crore -- went unsold once again due to its high base price, despite a 43% cut from 2016, when it had also found no takers. All three carriers gave it the miss, blaming the high starting price and called on the government to cut prices and put it up for sale again. Airwaves in the 2500 Mhz 4G band also went unsold.

Telcos need to pay upfront 25% of spectrum won in the 700 MHz, 800 MHz and 900 MHz bands, and 50% of the rest of the bands. The rest is to be paid in 16 annual installments after a two-year moratorium.

India auctioned over 2,308 units across the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.

Reliance Jio and Bharti Airtel were predictably the top buyers of 4G airwaves, followed by Vodafone Idea – financially the weakest among the three private carriers – which was a marginal player in the spectrum sale.

Analysts had predicted the government would net around Rs 45,000-to-50,000 crore, far less than the value of the bandwidth on sale. This, since Jio was the only telco facing a must-buy situation. Airwaves in the 800 Mhz band that it owns and also uses as part of a sharing pact with Reliance Communications are expiring in 18 circles in July. So, it needed to renew the permits in this key 4G band to be able to continue to offer services without disruption.