Why Airtel / Vodafone / Idea Won’t Overbid in 2015 Mega Spectrum Auction ?

2015 900Mhz Spectrum Auction 8 operators have submitted applications to participate in the bidding for the 2015 Mega Telecom Spectrum Auction. Reliance Jio is the surprise entrant with highest earnest money deposit (EMD) thus creating the fears of aggressive bidding. Idea cellular will be the most vulnerable if Reliance focuses on winning the 900MHz band Idea doesn’t have enough fire power to bid up if the process turns aggressive as the capability is limited by the EMD paid and may have to take an alternative path to the 2100 Mhz spectrum.

Why will Airtel / Vodafone and Idea Cellular Avoid Overbidding ?

I will renew my 900 MHz renewal spectrum at any cost (more…)

Why Reliance Jio Needs sub 1GHz Spectrum for 4G LTE ?

Reliance Jio 800MHz SpectrumReliance Jio Infocomm the telecom arm of cash rich Reliance Industries Ltd has already acquired 1800MHz and 2300MHz spectrum to rollout Telecom services. Globally 1800/2100/2300MHz are high frequencies that telcos use for capacity, 700, 850 and 900MHz are globally the bands that telcos use for coverage, as these are low frequencies with long range, and hence help keep cell count to a minimum. In this background we explore why Reliance Jio needs a smaller Spectrum Band to deliver high QoS broadband experience and compete aggressively with incumbents.

700MHz / 900MHz Spectrum Feasibility
The government is likely to auction 30-35MHz of 700MHz in 2015-16. However, 700MHz base price may be set higher than 900MHz making it highly expensive. 700MHz LTE ecosystem is also two years behind 850. 900, being a European 3G band, is not a mainstream LTE band yet and perhaps for a long time. We feel Jio would only select LTE ready frequencies, which makes 700/850MHz a better bet.

Case for Reliance Jio to acquire 850MHz Spectrum for 4G LTE Services
850MHz already in commercial LTE deployment in a (more…)

Uninor’s DTAC in Thailand Runs 3G in 850MHz

Uninor’s Subsidiary in Thailand, DTAC will launch 2.1GHz 3G service in early May. The 2.1GHz service will be on top of its WCDMA 850MHz 3G service which already covers 60% of the population. The porting capacity of the Mobile Number Portability clearing house will be upgraded soon to accommodate subscriber migration from 2G to 3G network.

It is indeed heading towards an era where any efficient spectrum can be used for any Services, especially when it comes to delivering Data.

Telecom Spectrum Auction Tepid response to 800MHz

After shutting operations in 10 circles, last month, MTS Sistema Shyam Tele Services Ltd bid for 8 circles in the Auction. The spectrum won by SSTL in eight circles is technology neutral and valid for 20 years. The company would be required to pay INR 36.4bn for the license period.

The 800MHz auction conducted on Monday, (March 11), saw a tepid response from the lone applicant, Sistema Shyam TeleServices (SSTL). It bid for 24 blocks in eight circles including Delhi out of the 64 blocks put up for auction. It let go 3 circles, namely, Mumbai, Maharashtra and Uttar Pradesh (East) of the eleven in which it’s licenses were cancelled. The total auction bid by it amounted to INR36.4bn

What was MTS Sistema’s Bidding Strategy ?
SSTL’s has scaled down operations in circles which are low revenue contributors and hold less than 1% market share. The 13 closed down circles together contribute 1/4th revenue and hold 0.5%/1% RMS/SMS. With mere 0.5% subscriber market share and about 1% revenue market share in the 13 circles, closure of these circles may not have any major decline in the competitive intensity in these areas.

The closure in Mumbai, Maharashtra and UP East would however imply tapering of some competition; but, there are still about 8-9 players in majorty of the Metro and A circles with about 4-5 players owning less than 10% market share.

While the license renewal for Delhi, Kolkata and Mumbai is due from 2014 onwards, going by tepid response for the Nov, 2012 (1800 MHz) and today’s auction in the 800MHz spectrum there could be a reduction in base prices going forward. Any further reduction will be positive for the incumbents.

Government May Miss Spectrum Collection Target Yet Again

For FY14, the government is looking to raise Rs 400 bn from the telco sector (both recurring revenue and one-off payments). As per the budget document, the one-off payments relate to receipts from auction of 1800, 900 MHz & 800 MHz and one-time spectrum charges as recommended by TRAI.

We estimate the targeted one-off amount in FY14 to be Rs 228 bn and expect the remaining Rs 180 bn to come from recurring revenues. In our view, the one-off amount could be raised if the government earns 1) onetime excess spectrum amount; and 2) successfully conducts 800 MHz auction at the set reserve price and sells all targeted 900/1800 MHz spectrum at a reserve price roughly 45% lower than the recently failed auction’s reserve price.

However, the 900 MHz refarming may not be conducted in FY14 due to prolong litigation. Even if 900 MHz, 1800 MHz and 800 MHz auctions are conducted in FY14, the government will only earn one third of the total raised money from the auction in this fiscal year as the remaining amount is likely to be deferred.