India's biggest auction of telecom spectrum kicked off today morning with seven operators in fray for a total of 2,354.55 MHz across seven bands, towards which a reserve price of Rs 5.66 lakh crore ($85 billion) has been fixed by the government.
Industry players have called the base price of airwaves in the auction as "unreasonably priced".
As much as 2,354.55 megahertz of frequencies are being put up for auction in seven bands -- 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz. The radiowaves can be used for 2G, 3G and high-speed 4G mobile services.
Reliance Jio, Vodafone, Idea Cellular and Bharti Airtel are in the fray for frequencies that are crucial for next-generation telecom services.
There is no end limit set by the government for the auction, but the bidding will be between 9 am to 7 pm everyday except on Day 1 when it started at 10 am.
Tata Teleservices, Reliance Communications and Aircel are also in the race. The department of telecom will release results of daily bidding at the end of every day.
While Jio, Airtel and RCom have pan-India 4G spectrum, Vodafone and Idea Cellular have an opportunity to bid for airwaves in the auction to expand their 4G service footprint for competitive advantage in the market.
Idea has 4G spectrum in 10 out of 22 telecom circles in the country. Vodafone, which has just brought in Rs 47,700 crore equity investment from its parent firm, has spectrum for 4G services in 9 telecom circles.
The government has fixed a pan-India reserve price of Rs 2,873 crore for spectrum in 1,800 MHz band; Rs 3,341 crore for 900 MHz; Rs 5,819 crore for 800 MHz; Rs 3,746 crore for 2,100 MHz; Rs 11,485 crore for 700 MHz and Rs 817 crore each for 2,300 MHz and 2,500 MHz bands.
The premium 700 MHz band is to be auctioned at a reserve or base price of Rs 11,485 crore per Mhz. The cost of delivering mobile services in this band is estimated to be around 70 per cent lower than 2100 MHz band used for providing 3G services.
A company interested in buying spectrum in 700 MHz band will need to shell out a minimum of Rs 57,425 crore for a block of 5 Mhz on a pan-India basis. This band alone has the potential to fetch bids worth over Rs 4 lakh crore.
Jio is the only company in this auction which is eligible to bid for pan-India spectrum in 700 MHz band. The total value of spectrum at the base price is more than double the gross revenue of the telecom service industry. Telecom service providers had a gross revenue of Rs 2.54 lakh crore in 2014-15.
(With PTI inputs)
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