The Indian Department of Telecom (DoT) has put out the Notice Inviting Application (NIA) for auction of seven spectrum bands starting from 29th September 2016. The spectrum bands include 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz constituting a total of 2356 MHz spectrum with the largest chunk in the 700MHz band. This auction is the Largest ever Telecom Spectrum auction till date in terms of quantity, quality and price of spectrum being put on auction.
In line with TRAI recommendations the DoT has put up all the spectrum up for auction. This includes
How Telecom Operators are Likely to Bid in 2016 Mega Telecom Spectrum Auction ?
Industry leader Airtel already has a pan-India 3G spectrum (except Kerala) and 4G spectrum (2300 MHZ and 1800MHz combined) in all the circles. Reliance Jio on the other hand still has no subscribers and has accumulated coverage spectrum (800MHz) through trading and sharing with Reliance Communications. Vodafone has requirements, but is more committed to 3G and it is in talks with Uninor for 1800MHz spectrum for 4G services which indicates its preferred band for 4G. Idea does not have the financial muscle to buy 700Mhz spectrum and it will complete its data footprint (except Mumbai) with a combination of 2100MHz and 1800MHz. Other small operators like Reliance Communications, Aircel, and Tata Teleservices are trying to sell their existing assets and are unlikely to buy spectrum.
700Mhz Spectrum Priced Exorbitantly – Limited Demand Seen
The best-case scenario for 700MHz is that operators such as Airtel and Vodafone might buy spectrum in some circles where there is coverage requirement and where pricing is not prohibitive (let’s say Madhya Pradesh). Thus a lot of spectrum especially in the 700MHz is likely to remain unsold. Even in other bands as Idea and Vodafone complete their data footprint a significant amount of spectrum will still remain unsold as there is a significant gap between demand and supply.
The current environment is marked by declining voice prices. Additionally, the industry is grappling with the possible impact of Jio on data pricing. In this scenario, incumbents are unlikely to commit significantly higher capital for spectrum, especially when there is no scarcity of spectrum and when requirements have already been fulfilled.
14th September is the Day when we will know if Auction will Succeed or Fail depending on the Earnest Money Deposit for the auctions. Stay tuned 🙂