How much should you bid for Phase 3 of the FM Auction?

Dear FM companies, here is your cheat sheet for the upcoming round of the phase 3 FM auctions:

For a 60% chance of winning the auction for a city, bid the amount in the second column. For an 80% chance, bid the amount in the third column. For an almost-certain 95% chance, bid the amount in the fourth column. (I’ll be talking about the statistical models and data collection that went into this in an upcoming post.)

A third of the cities up for auction in the last round of Phase 3 of the auctions went unsold. The cities highlighted in the table below are my predictions for which cities are likely to go unsold in this round.

Ask yourself how badly you want the frequency of a particular city. Refer to the table to find the value that matches your priority for that city. Bid that amount. (All figures in lakhs of rupees.)

City	60% chance	80% chance	95% chance	Reserve Price
Achalpur	237	420	710	171
Agartala	416	599	887	16
Aizwal	342	524	812	12
Akola	375	458	590	30
Alappuzha	272	356	490	702
Amravati	434	517	648	351
Asansol	912	1074	1329	194
Barshi	342	524	812	171
Belgaum	421	504	635	702
Bellary	284	369	504	702

Click here to view and download the full table.

Take Achalpur for example. Maybe you’re very keen on buying the FM station for Achalpur because of say, your business connections there. You’re best off bidding 710 lakhs for a 95% chance of bagging the frequency for Achalpur.

Maybe, unlike Achalpur, you’re not familiar with the business atmosphere in Agartala. Quite naturally, you decide that you want a lower, say 60% shot at winning the frequency for Agartala. In this case, you should look toward bidding at 416 lakh.

So that’s the way you want to bid for every frequency up for auction. But maybe just knowing what price to bid isn’t enough for you. You want to know if you’re getting a bang for your buck. The last column, the reserve price, gives an indication of just that. It’s the price at which an auction kicks off – a ‘base price’ for every city up for auction.

Some cities are overvalued and others are undervalued. For Agartala, the reserve price is far lower than the 60% bid; if you don’t buy it, someone else likely will. It’s reasonably valued. Now take a look at Alappuzha. It’s reserve price is quite high; it even tops the 60% bid. It’s an overvalued frequency and you would not want to buy it unless you’re very interested in Alappuzha. These ‘overvalued frequencies’ are highlighted in the table. My model says that these cities are punching above their weight: their reserve prices are way too high.

I hope this table was of value to you. Good luck at the auctions!