Broadband auction ends...Govt to pocket Rs385bn

Auction for India's wireless broadband spectrum ended on Friday after 16 days of aggressive bidding. Infotel Broadband Services, run by Anant Nahata, bagged spectrum in all 22 circles of the country and will pay Rs128.48bn. Infotel is owned by the son of Mahendra Nahata, managing director of Himachal Futuristic Communications Ltd. (HFCL). Qualcomm bagged the lucrative circles of Delhi and Mumbai. A slot of 20 MHz unpaired broadband spectrum went for Rs128.90bn, fetching the Government Rs385bn. Broadband spectrum in Mumbai emerged the most expensive, beating Delhi's highest bid of Rs22.41bn at Rs22.93bn.



Reliance Communications, Idea Cellular and Vodafone-Essar failed to win broadband spectrum in any circle. Bharti Airtel won broadband spectrum in four circles of Maharashtra, Karnataka, Kolkata and Punjab. Bharti said that scarcity of slots and the auction format resulted in extremely high price levels. The company said that it had secured spectrum in select circles to experiment with new technologies. Bharti will pay a total of Rs33.14bn for the BWA spectrum.

Combined revenue from the two auctions will touch Rs1.06 trillion (US$22.7bn), about three times the Government's initial estimates. To fund its fiscal deficit, projected at 5.5% of FY11 GDP, the Government is due to borrow a record Rs4.57 trillion (US$97bn) in the year. But it had assumed revenue of Rs350bn from the spectrum auctions while preparing estimates and some analysts have said that the windfall from the 3G-BWA auctions could cut the deficit to 4.5%, reducing market borrowings.