The biggest ever 2G and 3G spectrum auction of this decade witnessed bids worth a whopping Rs.94,000 crore as the fifth day of the sales process came to an end. The aggressive bidding witnessed at the auction raised concerns that whether telecom companies would hike the tariffs to suffice the spectrum prices.
Sunil Mittal, Chairman of Bharti Enterprises, the flagship company of the biggest telecom operator of the country, indicated that the high prices quoted at the auction might put a pressure on the telecom company financials that would directly correspond to a hike in the tariff. A majority of the spectrum that was put up for auction were held by Vodafone, Airtel, Reliance Telecom, and Idea Cellular. The spectrum companies of most of these companies are on the verge of expiring, owing to which it has become mandatory for them to win spectrum in order to be able to offer continued services. According to industry analysts, the situation might trigger a fierce battle of bidding among the country’s leading telecom operators.
The mobile licenses of 6 circles of Airtel, 9 of Cellular, and 7 each of Vodafone, and Reliance Telecom are up for renewal. According to reports, over almost 29 licenses across 18 service areas are set to expire between 2015 and 2016. The licenses represent about 80% of the total base of subscriber across telecom companies.
According to sources, successful bidders will have to pay from 25 to 33 per cent of the final spectrum sale price. This will help the Indian government to garner almost Rs.25,000 crore immediately after the spectrum auction. As per reports, eight leading telecom companies have already deposited a generous Rs.20,435 crore as the a part of the earnest money for the auction of rediowaves.