Vodafone, Bharti spend big to win airwaves in Rs 61,000 crore auction
Mobile market leaders Bharti Airtel and Vodafone bought telecommunications airwaves worth about $3 billion ( or nearly Rs 18,600 crore) each in an auction that raised nearly $10 billion in total (nearly Rs 61,000 crore), far exceeding the government's revenue target.
Bharti and Vodafone won airwaves in the premium 900 megahertz band that was available only in three key cities - Delhi, Mumbai and Kolkata. The telecoms unit of conglomerate Reliance Industries won airwaves in another band in more than a dozen service areas.
The government will get at least $3 billion upfront (around Rs 18000 crore) as companies are required to pay a quarter to a third of the winning price initially and the rest up to 2026. The government had targeted raising at least $1.8 billion (nearly Rs 11,000 crore) through the auction to help to shrink its budget deficit.
Finance Minister P. Chidambaram faces a challenge to meet the budget deficit target for the current fiscal year ending in March partly due to a shortfall in tax collections and revenue receipts from the sale of stakes in state companies.
"The government is happy and we will see a smile on the face of the finance minister," Telecoms Minister Kapil Sibal said after the auction ended on Thursday following 10 days of bidding.
Eight companies had applied to bid in the auction of 900 megahertz and 1800 megahertz band airwaves.
Idea Cellular, the country's third biggest carrier by customer and revenue, won airwaves in the 900 MHz band in Delhi. Telenor's Indian unit, Reliance Communications and Aircel also won airwaves in the 1800 MHz band in some zones.
Bids in the 900 megahertz band totalled about Rs 23,600 crore, while bids in the 1800 megahertz band were about Rs 37,600 crore.
The stakes were especially high for Vodafone and Bharti which use the relatively more efficient 900 Mhz band airwaves in key cities. They would have seen their rights expire in November unless they won them back in the auction.
India had traditionally sold airwaves for run mobile services through a state-selection process, but switched to an open auction in 2012 after a scandal over mis-selling of permits.
The government's spectrum auction in November 2012 and March 2013 flopped as most bidders stayed away, complaining the floor prices for bids were too high. Eight bidders applied to participate in the current auction after the government sharply cut auction reserve prices.
