3G, bwa auction: no scope for unrealistic bids

Last Updated: Tue, Apr 06, 2010 20:34 hrs

The online auction system for third generation (3G) and broadband wireless access (BWA) spectrum will prevent firms from placing unrealistic bids.

According to NM Rothschild and DotEcon, who designed the e-auction system, the platform would not allow ‘predatory’ jump while bidding and ensure a market-driven price for the spectrum.

The first ever auction of spectrum in India would start on April 9. The online system would allow bidders to login to the auction system from anywhere in the world.

The winners for the auction would be decided through several rounds, where the base price would be increased according to the subscription numbers of the available slots in a particular circle. The bidders will not have control on increasing the base price, as it would be decided by the auctioneer according to preset rules.

The price would be increased from anywhere between 10 per cent to 1 per cent after each round, depending on the demand.

For instance, if the number of bidders is one more than the number of spectrum slots, the increase would be 5 per cent. If there are two bidders more than the available slots, it would be raised by 10 per cent. However, if the number of bidders is the same as the number of slots, the price would go up by only 1 per cent.

The 3G auction process may take couple of weeks to complete, NM Rothschild (India) head Sanjay Bhandarkar said. The process would take place simultaneously in all 22 circles and stop only when the highest bids have been detected. The auction for the BWA spectrum would be conducted two days after close of the 3G auction.

The bidders will be provided information of the total demand for each circle. The name of the companies would not be revealed. However, the bid data would be made public after the completion of the auction process.

Telcos have been given points based on the amount of earnest money that they have deposited with the government for the auction. Obviously, those going for a pan-India licence have given more earnest money and, therefore, will have more points and flexibility to bid for various circles.

The base price for pan-India 3G auction is Rs 3,500 crore, while for BWA it is Rs 1,750 crore. Three 3G slots have been put up for auction In 17 circles, while in the remaining five circles, four slots will be auctioned. For BWA, two slots are available for auction.

The final bidders for 3G include Bharti Airtel, Reliance Communications, Idea Cellular, Aircel, STel, Tata Teleservices, Videocon, Etisalat DB and Vodafone Essar. For BWA, Aircel, Augere, Bharti Airtel, Idea Cellular, Infotel Broadband, Qualcomm, Reliance WiMax, Spice Internet, Tata Communications, Tikona and Vodafone Essar are in the fray.

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