The Department of Telecom (DoT) has declared the provisional winning price of all spectrum put up for auction. Final auction results are awaited as the Department of Telecom can release the same only after the Supreme court announces its verdict on a case related to the auctions. 900MHz spectrum got sold at 118% premium to reserve price: Rs 74 billion/MHz for the 17 circles where such spectrum was being auctioned. 800MHz spectrum has been sold in 18 of the 20 circles where spectrum was made available.
For these 18 circles, the provisional winning price is 65% higher than the reserve price Rs 45.4 billion/MHz. 800MHz spectrum remained unsold in Karnataka and Tamil Nadu. In Delhi, Maharashtra, MP and Mumbai 800MHz spectrum was sold at higher rates than 900MHz spectrum!
As per media reports, Vodafone has bid for the highest, Rs 345 billion. Idea and Bharti have bid for Rs 280 billion and Rs 275 billion respectively. These prices are higher than the cost of renewal of one 5MHz contiguous block of 900MHz spectrum, which is Rs 240 billion for Idea, Rs 165 billion for Vodafone and Rs 124 billion for Bharti Airtel, indicating that incumbents have succeeded in spectrum renewal across all circles.
Reliance Jio's bid amount of Rs 110 billion, is much lower than what we had anticipated considering the aggressive bids in the auction.
Commenting on the same, HDFC securities, said, ''Incumbents have bid for Rs 900 billion worth of spectrum, which amounts to 87% of the total bid amount. However, we feel that this is a pyrrhic victory for incumbents, as competition is unlikely to abate and tariff increases will be challenging. This, coupled with RJio's launch of data services by 2015-end, will result in sluggish EBITDA growth for Bharti/Idea. Bharti and Idea's FY15 net debt to EBITDA now stand at 3.0x and 3.6x.''
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