BWA auction sees strong start, price surges 34%

The wireless broadband access (BWA) spectrum auction kick-started on Monday with all the qualified players bidding for the 2 slots across all the telecom circles in the country. On the first day itself, the price for a pan-India spectrum rose by as much as 34.5% above the base price of Rs. 1750 crore, to close at Rs. 2354.53 crores.

A total of five clock rounds were completed on Monday with the government revenue touching Rs 4,706.36 crore at the end of the day. If the payment from the publicly owned BSNL and MTNL is also included, the government revenue will surge further to Rs 6,940 crore.

Looking at the individual circles, the category ‘A’ circles including Delhi, Mumbai, Tamil Nadu, Maharashtra, Gujarat, Andhra Pradesh, and Karantaka ended the day at a bid of around Rs 233 crore each. In the category ‘B’ circles, Kolkata and Punjab saw the highest bid of Rs 88 crore each while the Kerala circle was priced at Rs 76 crore. Haryana, Rajasthan, and West Bengal saw bids at Rs 60 crore each, while the UP (East) circle saw a price of Rs 65 crore.

At the end of first day, excess demand was being witnessed in 12 of the 22 circles, while eight circles saw negative demand. Highest excess demand was seen in Delhi, Mumbai, with eight players bidding for just two slots in each of the cities. Other circles with large excess demand include Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu, Kolkata, and Punjab, with 6 bids each for two available slots.

The BWA auction is expected to proceed at a quicker pace than the 3G auction, simply because of greater competition, but may not necessarily end much earlier. While most analysts agree that the bullishness in terms of bids may not match the 3G level, final bids are still expected to be much higher than the reserve price as fewer slots are available. Also, since none of the players could get a pan-India slot for the 3G, some of the large operators like Bharti Airtel and Vodafone etc would certainly like to compensate by bagging BWA slot in circles in which they don’t have 3G spectrum.

Meanwhile, the Union Telecom Minister A Raja on Monday expressed optimism that the BWA auction will be as good as the 3G auction and will yield over Rs 15,000 crore as revenue. ‘We expect competition will be as high as that of 3G. We expect to get more than Rs 15,000 crore towards licence fee from the BWA auctions,’ said Raja on the sidelines of the World Telecommunication Development Conference.