E-auction of first batch of private FM radio Phase III channels completed

At the closure of the e-auction, 97 channels in 56 cities became provisional winning channels with cumulative provisional winning price of about Rs 1156.9 crore

BestMediaInfo Bureau | Delhi | September 10, 2015

E-auction of the first batch of private FM radio Phase III channels comprising 135 channels in 69 existing cities of Phase II, which had commenced on July 27, 2015, got over yesterday with the completion of the Frequency Allocation Stage.

E-auction of the first batch consisted of two stages – Channel Allocation Stage and Frequency Allocation Stage. After the Channel Allocation Stage got completed on September 8, 2015 after 125 rounds of bidding spread over 32 days, the Frequency Allocation Stage commenced on September 9, 2015 at 10.00 am. In this stage, total three rounds of 30-minute duration each took place. There was no time gap between two consecutive rounds.

During the Frequency Allocation Stage, the provisional winning bidders were allowed to select FM frequency for the winning channel(s) from the frequencies already identified in the respective city and as mentioned in the Notice Inviting Applications (NIA) dated March 2, 2015 read with its subsequent amendment(s). Frequency selection preference was based upon the rank of the bidders, that is, Rank 1 bidder had the first preference to choose from the frequencies already identified.

At the closure of the e-auction, 97 channels in 56 cities became provisional winning channels with cumulative provisional winning price of about Rs 1156.9 crore, against their aggregate reserve price of about Rs 459.8 crore. Thereby the summation of provisional winning prices surpassed the cumulative reserve price of the corresponding 97 channels by Rs 697.05 crore or 151.58 per cent. Overall, cumulative provisional winning price exceeded the total reserve price of the first batch, that is, Rs 550.18 crore by Rs 606.72 crore or 110.27 per cent.

The current auction is indicative of the future growth of the private FM radio sector. This also shows that a transparent and fair bidding system can help realise the real value of the natural resources. This is the first time that private FM channels have been offered through Simultaneous Multiple Round Ascending (SMRA) e-auction. This auction design has enabled bidders to take informed decisions while placing bids and consider alternatives dynamically.

Another noteworthy feature is that out of 15 channels in Jammu and Kashmir and the North-East states, 12 channels have got provisional winners, with the city of Guwahati getting provisional winning price more than10 times its reserve price.

It may be noted that many steps were taken to enhance transparency as well as to remove barriers to participation which include:

1. To oversee the entire process of FM Phase III rollout, including the e-auctions, the Government had appointed an Independent External Monitor in consultation with the Central Vigilance Commission.

1. A pre-bid conference with all stakeholders was held on January 28, 2015 post issuance of the Information Memorandum of the first batch dated January 21, 2015. The Government received 85 queries and suggestion in this pre-bid and all queries were duly replied on February 17, 2015. The Government also accepted some of industry’s suggestions, prominent among them being the display of aggregate and excess demand, auction closure rule as per DoT’s auctions, relaxation in cut-off date for determining the net worth of an applicant company, identification all possible frequencies for 135 channels.

1. After the issuance of the Notice Inviting Applications (NIA) for bidding for the first batch on March 2, 2015, another pre bid conference with prospective bidders was held on March 10, 2015. The Government received 76 queries in this conference and again all queries were duly replied, followed by an amendment to NIA.

1. To create awareness for the bidders, the Government conducted a training session on April 22, 2015.

1. The Government conducted second training session with all the eligible bidders on July 17, 2015.

1. A three-day mock auction was arranged for bidders from July 22 to 24.

1. During the bidding days, daily auction report was published on the Ministry of Information and Broadcasting’s website.

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