By Arvind Padmanabhan 

New Delhi, March 11  The Rs.1,800 crore drop in the total value of highest provisional bids on the seventh day of e-auction of spectrum for telecom services was the result of a shift in the preferred band away from 900 MHz due to aggressive bidding, official data showed Wednesday.

In the 900 MHz band, there were two excess bids in terms of the blocks on offer at the end of Day One. But by the end of Day Seven, there was a shortfall of bids to the extent of 298 blocks.

In the Bihar circle, for example, at the end of the first day and some six rounds of bidding, the highest provision bid was Rs.42.24 crore per block for the 900 MHz band, which almost doubled to to Rs.Rs.80.56 crore per block by the end of the seventh day.

As a result, where there were bids for all the 31 blocks on offer for the Bihar circle at the end of the first, the seventh day saw six blocks going vacant, with offers for 25 blocks — a shift away from 25 blocks.

Such a scenario was even more stark for Himachal Pradesh.

In this circle, there was, in fact, excess demand for 30 blocks after the first day of bidding. But as bidding progressed and the highest bid per block price rose from Rs.8.44 crore to Rs.11.6 crore, there were no offers made for any of the 62 blocks on the table in the 900 MHz band.

“There was activity in two new service areas in 1,800 MHz band. There is a shift in activity from the 2,100 MHz and 900 MHz bands to 1,800 MHz and 800 MHz bands,” a senior official said after the seventh round of bidding concluded.

The official said the bidding norms are such that it allows a company to withdraw an earlier offer for a particular band and make a bid in another band if it sees that such a switch will prove beneficial, financially and in terms of spectrum management and growth potential.

Hence, the number of blocks sold provisionally at the highest bid price sees a drop. Thereby, the results the total value of bids for that circle under the band in question also sees a decline. “This is normal. As bidding progresses, this fluctuation settles down,” the official said.

The fresh interest was seen in Kolkata where there were no takers for all the 35 blocks on offer in the 1,800 MHz band after the first day. But at the end of the seventh day, there were as many as 98 bids, or 63 excess bids. This circle has no block on offer in 900 MHz band.

The government is offering in this e-auction a total of 103.75 MHz in the 800 MHz band over 85 blocks, 177.8 MHz in the 900 MHz band over 889 blocks, 99.2 MHz in 1,800 MHz band over 496 blocks and 5 MHz in the 2,100 MHz band over 17 blocks.

Eight companies are in the fray — Vodafone, Bharti, Idea, Telewings, Aircel, Tata Tele, Reliance Communications and Reliance Jio. The auction is crucial for some of them as their 20-year licence term draws to a close in December.

Fresh data on e-auctions also showed that the shift in band was not necessarily within a circle.

“This is due to several factors. First, there is a limited kitty a bidder has to operate within. Then, one has to consider the growth potential of each circle. One also has to look at the fact that spectrum licence issued earlier could expire in December,” an industry source said.

In Tamil Nadu, for example, even as the lack of interest continued in the 800 MHz band, there was a stark change in the 1,800 MHz band for this circle. From as many as 70 vacant blocks after the first day, the numbers dwindled to 17 after the seventh.

The highest bid price, however, remained unchanged at Rs.45 crore per block after the two days.

In Rajasthan, too, from 52 vacant blocks out of the same number on offer after the first day, the numbers fell to 27 after the seventh day, as the highest bid price went up from nil, against the reserve price of Rs.12 crore, to an actual bid of Rs.13.2 crore.

(Arvind Padmanabhan can be reached at arvind.p@ians.in)