How Telecom is heading from Spectrum Crunch to OverSupply ?

The Indian telecom industry has historically suffered an acute shortage of spectrum. The abysmally low absolute quantum of spectrum is compounded by highly fragmented spectrum holdings. TRAI’s recent recommendation and attempts by the telecom ministry to free up commercially unused 2100MHz spectrum indicates a new found feeling within the govt that ‘spectrum unsold is revenue lost’. Increasing the quantum of 1800 Mhz to be auctioned seems to be the first step in this regard.

Spectrum Allocation in the next 3 – 5 years
In light of recent developments, keeping in mind: 1) the change in govt mindset about selling as much spectrum as available (vs making piecemeal sales earlier); 2) a willingness by the govt to consider a reduced reserve price so that auctions succeed; and 3) analysing the current spectrum holdings with the available spectrum indicated in Apr-2012 by TRAI, we believe that over the next three-five years, the amount of spectrum allocated to the Indian telecom industry can go up by 70%.

Over and above the upcoming auctions, we note that more ‘commercially unused’ spectrum currently with the govt in 700MHz /1800MHz /2100MHz/2300MHz could hit the market in the next three-five years. Our analysis shows that over this time period, the total spectrum with private telcos could nearly double!