Eight mobile carriers, including top players Bharti Airtel and Vodafone are bidding for the third round of 2G spectrum auction that begun today.
The department of telecommunications (DoT), which is selling radio spectrum in two frequency bands - 900 MHz and 1800 MHz – expects to garner at least Rs11,300 crore ($1.8 billion) from the auction.
For Vodafone it is necessary to get spectrum in Delhi, Mumbai and Kolkata while for Bharti Airtel spectrum in Delhi and Mumbai is needed to continue operations as their current licences are expiring in November 2014.
The bidding is also crucial for Loop Mobile as it needs spectrum in Mumbai for continuing operations beyond November 2014.
The entry of Reliance Industries and Reliance Communications is expected to heat up the bidding process with each of the bidders fiercely bidding for their respective circles.
RIL, which has 4G spectrum across all 22 circles, has entered the bid war to enable the company provide basic cellphone services, which account for more than 80 per cent of industry revenue in India.
DoT has put on block around 385 MHz of spectrum in the 1800 MHz band, and 46 MHz in the 900 MHz band.
The two spectrum bands are the most efficient and can be deployed for 3G and 4G broadband mobile internet services as well.
Each company will get 240 minutes to extend bid round, giving them four hours to extend the auction round.
Normally 6-7 rounds of 60 minutes duration each take place in a day. There is a 20-minute break between the rounds.
The government hopes to sell all the spectrum put on auction. It had set a target of Rs40,874.50 crore for spectrum sale for the fiscal, which also include the one-time spectrum charge and annual licence fee.