Delhi attracts highest bids on second day of 3G spectrum auction

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SME Times News Bureau | 12 Apr, 2010
In the first-ever auction of the radio frequency spectrum for third generation (3G) telephony in India, Delhi attracted the highest bid even on the second day Saturday.

Ten rounds of the auction, which began Friday, have been completed, according to the latest details available on the Department of Telecommunications (DoT) website.

Delhi, which is emerging as one of the most sought after service areas, attracted the highest bid at Rs 392.31 crore against the reserve price of Rs.320 crore. It received bids from four players for the three available slots.

Mumbai, Karnataka and Gujarat attracted bids at Rs 377.36 crore each and Maharashtra, Andhra Pradesh and Tamil Nadu received bids at Rs.381.13 crore each.

Eight service areas - Jammu and Kashmir, Haryana, Punjab, Bihar, Orissa, Assam, North East and Himachal Pradesh - witnessed negative demand, or bids by lesser players than the slots available.

According to the Notice Inviting Applications (NIA) issued in February, of the 22 telecom circles, five states - Punjab, Bihar, West Bengal, Himachal Pradesh and Jammu and Kashmir - will have four private players for the auction.

Other circles, including the four metros of Delhi, Mumbai, Kolkata and Chennai, will have three private players.

The number of slots up for grabs exclude those allotted to state-run Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, which were allotted licences last year and have since started offering 3G services in their operating circles. But they will have to match the price paid by the highest bidder in their zones.

As many as nine telecom companies - Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications - are participating in the online auction process.

Bharti Airtel, Reliance Communications, Vodafone Essar, Tata Teleservices, Idea Cellular and Aircel are bidding for an all-India spectrum, while Videocon, S Tel and Etisalat are bidding only for selective circles.

The government has fixed a reserve price of Rs.3,500 crore for pan-India 3G spectrum. It is a simultaneous auction of 22 service areas over a secure website on the Internet.

The auction has multiple rounds. At each round, the price is hiked from anywhere between 10 to 1 percent over the previous round's price depending on the demand.

The auction is being held from 9 a.m. to 7.30 p.m. on all days, except Sundays and national holidays.

The process will end only when the demand is equal to the number of slots available in each circle.

According to a senior DoT official, it is difficult to set a time-frame for the 3G bidding.

"It may take two weeks, or may stretch for a month also," the official said.

The bid data, including the winning companies' names, will be made public after the auction's completion. The winning firms will have to deposit the money within 10 days after the auction.

The successful bidders would be allowed to offer 3G services on a commercial basis from Sep 1.

The 3G telecom services will allow faster connectivity than what is available now and enable applications such as Internet TV, video-on-demand, audio-video calls and high-speed data exchange.

The auction for broadband services will begin two days after the process concludes for 3G spectrum.

As many as 11 companies - Bharti Airtel, Idea Cellular, Aircel, Augere Mauritius Limited, Infotel Broadband Services, Qualcomm, Reliance WiMax, Spice Internet Service Provider, Tata Communications Internet Services, Tikona Digital Networks and Vodafone Essar - will bid for broadband wireless access (BWA) services.

The government has set Rs.1,750 crore as the base price for BWA spectrum.

The central government hopes to garner Rs.45,000 crore from these auctions.