* Vodafone buys $3 bln-plus worth of spectrum -source
* Bharti spends $2.13 bln, Jio spends $2.05 bln, Idea $1.92 bln
* Govt to get $4.8 bln upfront; $84 bln on offer dwarfs proceeds (Adds Vodafone, details on auction, background)
By Rupam Jain and Promit Mukherjee
NEW DELHI/MUMBAI, Oct 6 (Reuters) - Vodafone Group Plc was the biggest spender in an Indian mobile phone spectrum auction that raised a total $9.9 billion for the government, as carriers competed to boost subscribers in the world's fastest-growing internet services market.
The proceeds of the auction, which ended on Thursday after five days of bidding, helped India raise about 658 billion rupees ($9.87 billion).
That figure was well below the $84 billion worth of spectrum on offer however, as carriers shunned the priciest category of airwaves, snapping up less than half of the total on offer.
Yet given the vast volume available, no one had expected the priciest spectrum - that offers deeper reach - to be bought now, as data demand in India is still in its infancy and data costs in the ultra-competitive market are falling, making it harder for carriers to justify big cash outlays.
JPMorgan earlier on Thursday had projected the auction would generate between $8 billion and $12 billion.
The government had budgeted for 646 billion rupees ($9.7 billion) as revenue from the auction in the current fiscal year ending March. It will receive some 320 billion rupees upfront, as carriers are allowed to make payments in instalments.
Vodafone, which in recent months injected $7.2 billion in its Indian unit, the market's No.2, bought spectrum worth more than $3 billion, according to a source with knowledge of the matter.
Market leader Bharti Airtel bought $2.13 billion worth, while No. 3 player Idea Cellular spent $1.92 billion at the auction.
The three rivals, which together hold more than 60 percent of the Indian market of a billion-plus mobile subscriptions, are being challenged by new entrant Reliance Jio Infocomm, backed by India's richest man Mukesh Ambani.
Reliance Jio, which has the most 4G airwaves across India's 22 telecoms zones, last month launched services with free voice calls and cut-rate data prices, triggering a price war. It bought spectrum worth $2.05 billion.
Although among India's top three, Vodafone and Idea lag Bharti and Jio in terms of 4G presence, and were seen beefing up their high-speed data networks by aggressively bidding in the latest spectrum sale.
Idea said on Thursday it had been able to complete its mobile broadband footprint in all 22 service areas after the latest auction. Vodafone was yet to give details.
The government found no takers for the best-quality and the priciest 700 megahertz airwaves, offered for the first time.
Carriers instead purchased spectrum in the 1800 and 2300 bands that can also handle 4G traffic.
All seven carriers including Reliance Communications and Tata Teleservices that participated in the auction bought some spectrum, Telecoms Minister Manoj Sinha told reporters on Thursday.
The auction was India's largest by spectrum volume.
$1 = 66.6839 Indian rupees Writing and additional reporting by Devidutta Tripathy; Editing by Alexandra Hudson and Elaine Hardcastle