Two key circles—Delhi and Mumbai—did not receive any bids on the first day.
After the end of the seventh round, the government, which had hoped to raise about Rs 40,000 crore in revenue, had received bids worth only Rs 9,224.75 crore. With telcos finding the base price for bidding too high, and with all companies interested in CDMA spectrum withdrawing their names leading to no auction, analysts had halved their projection for proceeds from the auction to around Rs 20,000 crore.
At the end of auction on the first day, there had been bids for 98 blocks across 18 circles of the total 176 blocks in 22 circles that were up for grabs.
Here is how the bids have gone: Nine blocks for Uttar Pradesh (East), 10 for UP (West), eight each for Gujarat and Bihar, seven in Assam, six each in West Bengal, Haryana, Orissa, J&K, Madhya Pradesh and North-East, five in Maharashtra, four each in Andhra Pradesh, Kolkata and Tamil Nadu, and one each in Himachal Pradesh, Kerala and Punjab.
Other circles that did not find any bidders include Rajasthan and Karnataka. Telcos will get another chance to bid for circles that remain unsold after the initial rounds of bidding. The government is yet to decide on what will be done in circles that remain unsold after the auction ends. Till it does, no bidders in a circle will mean only the existing players will keep operating in that circle.
Bidding for each circle is happening separately. Many circles have so far seen fewer bidders than the number of blocks up for grabs, sources said, which means an auction is not possible for those circles.
The muted response to the 2G auction is in contrast to the sale of 3G airwaves that the government held in 2010, which lasted more than a month. India raised more than $12 billion from that auction.
No company has applied for a pan-India licence in the 2G auction. The reason there has been such poor response, the industry says, is that the government's base price at Rs 14,000 crore for 5 MHz of GSM airwaves in all the 22 telecom zones is too high. It is more than seven times what companies paid in the 2008 grant process. Bharti group chairman Sunil Bharti Mittal had said last week that the reserve price of Rs 14,000 crore was "too high" and the auction of 2G spectrum would be over on the first day itself. Bharti is India's biggest mobile carrier.
The country is divided into 22 telecom circles, with each circle roughly equal to a state. Exceptions include Mumbai and Maharashtra, which are considered separate circles. Also, all north-east states are clubbed into one circle. The auction that began today is being held for all 22 circles for the 1,800 megahertz spectrum band. The 22 circles in which India has been divided are West Bengal, Andhra Pradesh, Assam, Bihar, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, North East, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh (West), Uttar Pradesh (East), Delhi, Kolkata and Mumbai.
In each zone or circle, the government is auctioning spectrum in 11 blocks, with each block equal to 1.25 Mhz of airwaves; the exception are Delhi and Mumbai, where there are only 8 blocks. Of the 11 blocks in each circle, three blocks are reserved for new telecom players or operators whose 122 licences were quashed by the Supreme Court on February 2 in the 2G spectrum allocation scam case.
Five operators—Bharti Airtel, Vodafone, Idea Cellular, Telenor and Videocon—are bidding for GSM (Global System for Mobiles) airwaves. The telecom ministry had planned to hold two separate auctions for airwaves used by GSM and CDMA (Code Division Multiple Access) - based mobile phone carriers.
However, with Tata Teleservices and Videocon pulling out of the auction last week, there are no bidders for CDMA spectrum. Videocon will continue to bid for GSM spectrum.
Norwegian telecommunications group Telenor needs to win spectrum in the auction to continue operations in India, the world's second-biggest mobile phone market, as it is set to lose all its permits.
Idea Cellular, set to lose seven of its licences, has to win them back to retain its pan-India presence.
New players and telecom companies affected by the verdict will have to win at least 4 blocks to start or continue their operations. So, Idea Cellular, Videocon and Telenor will have to win at least 5 MHz of spectrum, divided in blocks of 1.25 MHz each, to continue their services in areas where their licences were cancelled.
Existing players whose licences were not affected by the Supreme Court order can bid for only two blocks—Airtel, Vodafone, and partially Idea Cellular. Bharti Airtel and Vodafone are participating in the auction to buy additional airwaves frequencies and can bid for maximum of two blocks in a telecom area.
The auctions were organised after the Supreme Court ordered all cellular permits to be revoked after a flawed state sale in 2008. The cancelled permits included Uninor's 22 licences, Loop Telecom (21), Sistema Shyam (21), Idea Cellular including Spice Communications (13), Videocon (21), Etisalat DB formerly Swan Telecom (15), S-Tel (six) and Tata Teleservices (three CDMA licences).
Last week, the Supreme Court pulled up the government for not following its February 2 order of auctioning the entire 2G spectrum made available after cancellation of 122 licences. "Prima facie we find you (Centre) aren't carrying out the (February 2) order but playing with it," the court had said.
The government has to file an affidavit by November 19 on why it is not implementing the Supreme Court's 2G order in full.
With inputs from agencies