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Phase III: At Rs 144 crore, has Delhi stolen everyone’s thunder?

10-August-2015
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Phase III: At Rs 144 crore, has Delhi stolen everyone’s thunder?

As of Friday, with 40 rounds of bidding over a course of 10 days, Delhi crossed Rs 144 crore, much higher than any other city. The closest is Bangalore, which stands at Rs 104 crore. Though it was anticipated that Delhi and Mumbai would be highly sought after the amount of money that is being bid for Delhi has exceeded all expectations. Mumbai, in fact, which was supposed to be the second favourite has now fallen out of favour over the last few rounds and now the provisional winning price for it is around Rs 93 crore.

To give an example, before the auctions started, Delhi was expected to get about Rs 70 crore, according to the highest estimates. The Day 10 provisional winning price is more than double of this amount.

This disproportionate interest for Delhi seems to have negatively impacted some other cities. For example, the north east has largely been neglected. Even in the south, cities like Hyderabad and Chennai, which are supposed to be mature markets have not really seen a lot of interest.

As of Day 10, the provisional winning price for the former stands at Rs 18 crore, which has remained constant over the last few days. Similarly, Chennai, which now has a provisional winning price of Rs 42 crore, has not seen as much as activity as was expected before the auctions.

Cities like Ahmedabad, after a lot of interest in the early days of the auctions failed to see a single new bid in the last two rounds of auctions. As of the end of Day 2, the provisional winning price for Ahmedabad is just under Rs 43 crore.

Under Phase III rules, a FM operator can hold more than one frequency license in a city; something that was not the case under Phase II rules. This has obviously led to the larger stations, which can afford to pour in the money to target the metros like Delhi, Mumbai and Bangalore, which had frequencies up for grabs. These cities are among the most lucrative markets for FM radio and Delhi is generally held to be the most profitable among them.

No wonder then that it appears that the major players are all gunning for the single frequency in Delhi even if it is at the expense of other Tier II cites. Take the case of cities like Aurangabad, Kolhapur, Jammu, Lucknow, etc. still have excess frequencies, which have yet to see even a single bid and these cities might actually be considered as upcoming cities for radio.

As of Day 10, there are hardly any new active bids and it now appears that the Phase III auction will now be winding down soon. According to the MIB’s auction rules, there needs to be at least 80 per cent activity from the qualified bidders in a given round for the auctions to continue.
 

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