The pool will include unsold spectrum from previous auctions across various bands and 2x35Mhz of spectrum in the 700 Mhz band. The Indian regulator (TRAI) has announced the reserve price for all the bands for the 22 market areas (called circles).
The recommended reserve price for the 700Mhz band is 100-400% more than closing price of 850 and 900Mhz spectrum sold in the last two auctions in 2014 and 2015 (see table below). The TRAI has recommended the spectrum allocation to follow the LTE band 28 which is also called the APT700 band.
The LTE Band 28 has an extremely poor device ecosystem compared to other LTE bands (second lowest number of compatible devices). The only major countries which have commercially available networks in the band are high-income markets of in Taiwan, Australia and New Zealand. In the last two auctions (2014/ 2015) incumbents faced closure of businesses if they did not buy their operating spectrum which was due to expiry. Further we believe Reliance Jio was compelled to participate and buy spectrum to maintain a competitive spectrum position against the incumbents. Both these factors are absent in the upcoming auction.
Both Jio and Bharti has significant spectrum to manage a ramp-up in 4G for the next 2-3 years and hence have minimal utility for 700Mhz spectrum. While Idea and Vodafone are constrained in some markets, the 700Mhz spectrum cannot alleviate the issues in the medium term.
