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FM radio Phase III e-auction sees poor response on Day 1

MUMBAI: While the government is expecting to earn $390 million from the auction of the second batch of private FM radio Phase III channels, the response on the first day of bidding was poor.

At the end of the bidding, 58 channels in 42 cities became provisionally winning channels. They had cumulative provisional winning price of around Rs 182 crore (Rs 1.82 billion) against their aggregate reserve price of about Rs 179.2 crore (Rs 1.79 billion).

A senior radio executive told TelvisionPost.com that the bidding saw very poor response. “Only 56 out of 266 frequencies elicited response. Out of these, fewer than 10 frequencies got some actual competition. From here on, it can rise a little but not much. We had said almost two-thirds of the frequencies would go unallocated, and I think it might end up worse than that. I guess Hyderabad is the only city that will drive the bid,” he adds.

The four-round bidding took place for around 266 FM channels in 92 cities, which comprised 227 channels in 69 fresh cities and 39 unsold channels from 23 cities of the first batch.

With only one frequency up for grabs, the city of Hyderabad had the highest reserve price set at 18 crore (Rs 180 million). The opening bid was set at Rs 20.83 crore (Rs 200.83 million), and after the four rounds there was no change in the competitive winning bid. The metro city grabbed the attention of two players. The percentage price increment applicable for the next clock round for Hyderabad will be 5%.

Besides Hyderabad, there are five other cities like Itanagar, Agartala and Jhansi who had bids above the reserve price.

52 out of 92 cities did not see any bidding on the first day, mainly due to the high reserve price.

For the first time, the states of Uttarakhand and Nagaland, as well as the border towns of Poonch Mokukchung, Leh, Kathua, Kargil and Bhaderwa, were also listed to have private FM channels.

For border towns like Kargil, the opening bid was set at Rs 500,000 for three frequencies. With only one player bidding, the competitive bidding did not see any change at the end of the day. There will be no percentage increment for the next round. Other towns like Mokukchung also suffered a similar fate, with only one player bidding for three frequencies. The opening bid was again set at Rs 500,000 and did not see any change even at the end of the day.

A total of 14 players were allowed to participate in the auction. Many big players such as Big FM, Red FM, Radio City, My FM, Fever FM and Radio One decided not to participate. The participation and response was low mainly due to the high reserve price for the Tier II and Tier III towns.

With earnest money deposit (EMD) of Rs 37.5 crore (Rs 375 million), ENIL, the radio company of the Times Group, has shown that it will be the largest bidder is this new batch of auction. In fact, ENIL’s EMD comprises 43% of the total Rs 87.2 crore (Rs 872 million) deposited by 14 companies who have been allowed to participate in the auction.

List-of-Pre-qualified-Bidders-for-EAuction-of-Second-Batch-of-Private1

Sun Group’s Kal Radio had deposited earnest money Rs 13.3 crore, the same as Ushodaya Enterprises. South Asia FM, also owned by Sun Group, had deposited Rs 4.4 crore (Rs 44 million). Sambhaav Media was the fourth-highest among the list of eligible bidders with EMD of Rs 6.9 crore (Rs 69 million).

The ongoing auction is a simultaneous multiple-round ascending (SMRA) e-auction.

Click here Report for day one of e-auction