23 Nov 2017
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Day 8 of FM Phase III: Provisional winning price for Bengaluru to cross Rs 100 cr

MUMBAI: As the FM radio Phase III auctions complete a week of bidding, the second week is seeing some surprises as another city is now set to cross the Rs 100-crore milestone in terms of reserve price.

After Delhi, the city of Bengaluru has touched the Rs 98-crore mark after four rounds of bidding today. The city will see a five per cent price increment in the next clock round, taking its reserve fee to Rs 100+ crore.

Towards the close of the fifth day of bidding, the lone frequency available in the national capital became a big catch, with its provisional winning price crossing Rs 100 crore (Rs 1 billion).

The general expectation was that Mumbai and Delhi would be the big fish for radio players to catch. However, it came as a surprise to some players when the reserve fee of these cities, initially priced at Rs 35 and Rs 31 crore respectively, went as high as Rs 89 crore (at the end of 32 clock rounds) and Rs 133 crore (at the end of 32 clock rounds) respectively.

Some radio players stated that only the cash-rich top players could afford to amortise their costs in such a scenario, and slowly the bids for these frequencies came down.

But the competition continues as Mumbai still received two bids, while Delhi now has the interest of only one player, given its high provisional winning price.

Not far behind is Bengaluru, which has touched Rs 98 crore and is seeing two players vie for its single frequency. However, the bid has reduced by one as against yesterday, which could be due to the rising price.

A senior radio executive commented, “The auctions are going strong and it mostly seems to be a fight between Radio Mirchi and Red FM for the frequencies in Delhi, Mumbai and Bengaluru. With the way the prices are rising for these cities, it is not sustainable. For example, in 2006, Delhi was Rs 31.42 crore, so at 8 per cent inflation for nine years, the value should be Rs 65 crore. Now Delhi may touch Rs 140 crore, which is 4.5 times. For Bengaluru, it is almost six times, so these values defy economics.”

During the day, four rounds of bidding took place. So far, 32 rounds of bidding have taken place. At the close of the eighth day of bidding, 83 channels in 56 cities became provisionally winning channels with cumulative provisional winning price of around Rs 869 crore (Rs 8.69 billion) against their aggregate reserve price of about Rs 395 crore (Rs 3.95 billion).

Thus, the summation of provisional winning prices exceeded the total reserve price of the first batch by about Rs 319.11 crore (Rs 3.19 billion) or 58 per cent.

Bhubaneswar and Jaipur continued to see action with the provisional winning price of the cities going up to Rs 7 crore (Rs 70 million) and Rs 15.7 crore (Rs 157 million) respectively. While Jaipur received three bids as against to two yesterday, the bids for Bhubaneswar came down a bit from five to three.