Spectrum auction takes off from Rs 56,554 crore on 7th day

Spectrum auction today entered the 43rd round of bidding on seventh day after starting off from Rs 56,554 crore in terms of value, ensuring minimum revenue of about Rs 16,750 crore in the current fiscal.

"Spectrum auction has resumed at 9 am...there was excess demand in Assam and Maharashtra service area in 1800 Mhz band. Spectrum price per block in these circles increased by Rs 4 lakh and Rs 1.04 crore respectively," an official source said.

At the end of the 6th day, spectrum price in Assam set by the government had increased three times over base price to Rs 4.22 crore per block implying Rs 21.1 crore for a megahertz. Assam witnessed an excess demand of 5 blocks whereas Maharashtra saw an excess demand of 10 blocks for 1800 Mhz.

Spectrum price in 1800 Mhz band in Maharashtra increased over 43 per cent last week to Rs 52.1 crore from base price of Rs 36.4 crore.

Bids worth around Rs 33,082.58 crore are received for 1800 Mhz and Rs 23,472.34 crore for 900 Mhz.

Spectrum price in 900 Mhz band frequencies, in which mobile signal gives almost double coverage compared to 1800 Mhz band, saw significant increase in base price in Delhi service area last week.

The price of 900 MHz band in Delhi crossed 3G price on Friday but rates of these airwaves are not comparable as per industry experts.

"Wavelength in 900Mhz band are 2 to 2.5 times more efficient than 3G band (1900 MHz). Hence a company will need to invest more in 3G band compared to 900 MHz band. The price of 900 MHz obviously has to be more than that of 3G. The present auction will indicate whether bids for 3G were

overpriced or were right," Industry expert Rakesh Mehrotra said.

CAG in 2010 had computed notional loss of Rs 1.76 lakh crore by comparing price of 1800 MHz band spectrum with 3G price.

Price of 1800 MHz band spectrum in only Assam service area has increased 1.5 times of the amount that companies paid for 3G spectrum.

Though 900 Mhz band base price in Kolkata was already fixed above 3G rates that was discovered through auction in 2010, the price of Delhi airwaves was about 11 per cent more than 3G price.

Same set of airwaves in Mumbai service area are about 12.5 per cent still less than 3G price that companies paid in 2010.

The price in Delhi for 900 Mhz has more than doubled to Rs 733.63 crore per MHz from the base price of Rs 360 crore. Mumbai was up 71.67 per cent to Rs 563.09 crore per MHz from Rs 328 crore per MHz. In Kolkata, price was up 55.70 per cent to Rs 194.63 crore per MHz from a base price of Rs. 125 crore.

As per the Department of Telecommunications (DoT), there was bidding for 11 blocks out of 16 put up for sale in Delhi, 5 out of 16 blocks in Mumbai and 12 out of 14 blocks in Kolkata for the premium 900 Mhz band at the end of sixth day.

The budget for 2013-14 set a total target of Rs 40,874 crore from spectrum revenue in this fiscal. A bumper collection from airwaves auction would help the government keep rising fiscal deficit under control.

The country's fiscal deficit at Rs 5.16 lakh crore has already crossed 95 per cent of budget target in the first nine months of 2013-14.