2015 Spectrum Auction Implications – Entry Cost Rises, Tariffs Look Up

Spectrum Auction ImplicationsThe mega 2015 spectrum auctions finally concluded after 19 days and 115 rounds of aggressive bidding. The Clearing Prices are as shown in this chart.

Entry Cost for Wireless Operators Rise Significantly in India
Even as most of the challengers (barring RCOM) did not face spectrum renewals in these auctions, their medium-term prospects of survival in the Indian wireless market just got bleaker, in our view. High spectrum prices are now a reality, for all operators, irrespective of their revenue market share. Spectrum pricing has now hit a level where even the most efficient operators (more…)

How Many More 3G Operators can be Accommodated in 900Mhz Spectrum Band ?

Contiguity is the key factor for the launch of 3G services and a minimum requirement for a successful rollout. We look at availability of extra spectrum across the circles (including surrender of spectrum from BSNL) and the corresponding contiguous blocks.

We note that in six of the 18 circles, there is a creation of an additional block of 5Mhz thereby allowing each of the top-three operators to gain presence in the market. On the contrary, in other circles, for example in Madhya Pradesh, either of the top-three is capable of winning, while (more…)

Broadband Development Under NaMo – DoT Secretary

Mr M. F. Farooqui, Secretary, Department of Telecom met Analysts and was very optimistic in his views about the Telecom sector messed up by Sonia Gandhi led Congress Government in the last 10 years. Policy making, as well as implementation, is likely to be quicker under the new government, and decisions can be expected to be loud and clear, as per Mr Farooqui.

Broadband Bonanza likely to happen as Mr. Farooqui pointed out, (more…)

1800MHz Spectrum Frenzy – Operators Betting Big on Data

4G LTE IndiaDespite ample supply at the 14 February auction, prices in 1,800 MHz reached INR 22.7bn/MHz, 29% over the reserve price. Prices for 900 MHz in Mumbai/Delhi Kolkata rose an average 2.3x the 1,800 MHz price. Both prices were higher than we anticipated. Demand shot up mainly because of (1) incumbents’ eagerness to corner 1,800 MHz for 4G / LTE and de-risk their 900 MHz holdings; (2) Reliance Jio’s demand for 5.0-6.6 MHz across 14 Metro / A-category circles. Reliance Jio Infocomm’s entry is not worrisome, but the industry may have overpaid for data potential.

Idea Cellular’s Love for 900Mhz Spectrum
Though Idea’s acquisition of 5 MHz in the 900 MHz band in Delhi makes it slightly better positioned for 3G data, the company is still short of data spectrum, in our view, despite aggressive participation in the 1,800 MHz band auctions. We also think that Idea has tried to de-risk the upcoming 900 MHz auctions in its key (more…)

Why Reliance JIo Infocomm will Bid in Spectrum Auction ?

Airtel , Vodafone, Idea Cellular (Idea), Reliance Communications (RCOM), Reliance Jio (RJIO), Tata Teleservices (TTSL), Aircel and Uninor have submitted applications for participation in the 900MHz and 1800MHz auctions to be held in February 2014. The previous auction (March 2013) had failed to elicit any response due to the high reserve price and stretched financials of operators. The February 2014 auctions were anticipated to receive better participation and aggressive bidding (in select circles).

The recent deal between RJIO and Airtel, which has accelerated the former’s rollout plans, could heighten competition in the upcoming auctions. However, even post availability (more…)

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