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India's spectrum auction ends in virtual failure, raises 11.6% of target
India's telecom spectrum auction -- touted as the largest, given the quantum of airwaves on the block -- ended in a virtual failure, closing within five days with a total commitment of only Rs 65,789 ($9.8 billion) crore, or about 11.6 per cent of the expected Rs 5.66 lakh crore ($8.5 billion).
 
The failure has been attributed to the high reserve price decided by the regulator and approved by the central government.
 
"It is a failure to an extent. The largest chunk of spectrum didn't find any buyers because of serious miscalculation by the regulator and the central government on the current market value of 700 MHz spectrum. They overpriced it and the players decided to wait till the price becomes more realistic," said Mahesh Uppal, Director of telecom consultancy Com First.
 
A total 2,354 MHz of spectrum was put on block for e-auctioning, but only 965 MHz were sold -- or just 41 per cent of what was on offer. The money raised on the first day, of around Rs 53,000 crore, was an early portent that not everyone was enthusiastic about bidding for the airwaves. Even the earnest money deposit was low.
 
The auction went through 31 rounds for seven bands --700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. There were no takers for 700 MHz and 900 MHz -- as had been warned by experts and the industry alike.
 
But Communications Minister Manoj Sinha tried to put a positive spin on the money to be raised. 
 
"The total upfront payment due to the government is around Rs 32,000 crore. This is the highest in the last five years.
 
"It's a big achievement that we could sell 965 MHz," he said.
 
Top investment banker Goldman Sachs had predicted that the total proceeds from the auction will be around $7 billion -- less than half of $16 billion obtained in the 2015 auction, and sharply below $85 billion if all spectrum was sold at the reserve price.
 
The Cellular Operators' Association of India (COAI) said the lack of enthusiasm on the operators' part was majorly due to unrealistic pricing, high debt and single-digit growth that the industry is currently reeling under.
 
"We are hopeful the government and the Department of Telecommunications will take cognizance of the role a high reserve price had on bidding, as far as the 700 MHz is concerned, and will re-calibrate the price so that spectrum in the band could be put up for auction, maybe two years from now," said its Director General Rajan S Mathews.
 
Bharti Airtel, India's largest telecom services provider, on Thursday said that it has acquired 173.8 Mhz of spectrum across 1,800 MHz, 2,100 MHz and 2,300 MHz bands for a total consideration of Rs 14,244 crore.
 
The new entrant, Reliance Jio, said it has acquired 269.2 MHz spectrum for Rs 13,672 crore.
 
"We have expanded our spectrum footprint thereby significantly enhancing capacity of our all-IP data strong network and ensuring world class services for all Indians. Jio is committed to taking India to global digital leadership by bringing the power of data to all Indians," said Reliance Industries Chairman Mukesh D. Ambani.
 
Another key player, Idea Cellular, said it has acquired 349.20 MHz of spectrum for Rs 12,798 crore. "Idea is now well equipped to offer 4G services on its own spectrum across 20 service areas," it said.
 
The auction would also fail to help in fully realising the revenue target of Rs 98,994.93 crore that had been provided for in the budget for this year against 'other communications services' -- the bulk of which is scheduled from the fee paid for spectrum.
 
Other companies participating in the auction were Vodafone India, Reliance Communications, Aircel and Tata Tele, all together furnishing a total earnest money of Rs 14,653 crore.
 
The total amount of money committed through the auction will not immediately come to the government as the operators have been given the option of both upfront and deferred payment.
 
The biggest telecom auction did not start too well on Saturday with subsequent days seeing only marginal increments taking the amount to Rs 65,789.12 crore on the fifth day, when the process had to be called off for lack of further interest.
 
Highlights:
 
Band (MHz) Quantity put to auction (MHz) Quantity sold (MHz)
 
700 770 0
 
800 73.75 15
 
900 9.4 0
 
1800 221.6 174.8
 
2100 360 85
 
2300 320 320
 
2500 600 370
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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Over 3,800 flights cancelled in US ahead of Hurricane Mathew
Bracing for a category four Hurricane Mathew, which left around 269 people dead in Haiti, airlines and airports in the US are on an war footing. Around 3,862 flights have been scheduled to be cancelled between Wednesday and Saturday.
 
Hurricane Matthew was forecast to make landfall on early Friday, between West Palm Beach and Cape Canaveral in Florida, NBCNews reported.
 
Meanwhile, the hurricane began tropical storm conditions in Florida -- with potentially catastrophic hurricane strike and "sandy-like" storm surge for parts of Florida, Georgia and South Carolina.
 
Although, the Miami International Airport and Palm Beach International Airport planned to remain open, the commercial scheduled flights were halted.
 
Even if the airports and airlines wanted to ensure quick restoration of schedules, in an extremely rare move, Ft. Lauderdale-Hollywood International Airport shut down for the first time since Hurricane Katrina in 2005.
 
As of Thursday evening, 3,862 flights were cancelled between Wednesday and Saturday, according to FlightAware.com, ABC news reported.
 
The storm had regained category four strength, with winds of 145 mph expected at landfall. There was a chance the winds could reach category five strength.
 
Florida Governor Rick Scott had warned on Thursday that the impact would be "catastrophic" and had urged 1.5 million people to evacuate. "This storm will kill you."
 
"This storm is a monster," he said. "Matthew is likely to produce devastating impacts along portions of the east coast."
 
Scott had urged residents across the state's 580-mile Atlantic coastline to brace for the worst.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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