The ongoing spectrum auction has become competitive for the 900Mhz band spectrum, which is on offer in the three metros (Mumbai, Delhi, Kolkatta). The incumbents currently hold spectrum primarily in 900Mhz band and would lose access in Nov 2014 if they fail to win it back in the auction.
In the 900MHz band, cumulatively Mumbai has witnessed the highest price escalation of ~72% over the reserve price. Delhi/ Kolkata have recorded 59%/ 54% appreciation in bid price over the three days. 900MHz price for all three metros are in the range of 2.6-2.7x 1800MHz prices for these circles. The current levels of 900MHz prices are starting to inch above the fair value range, in our view. The bid price on an average for 900MHz in metros is already ~77% of the Mar-13 reserve price (which was rejected by all operators).
In the 1800MHz band on Day 3, price escalation (demand exceeded supply) was seen in nine circles – Assam, Bihar, Gujarat, Delhi, J&K, Madhya Pradesh, Maharashtra, West Bengal and UP West. Nevertheless bid price saw a modest ~4% increase in pan-India spectrum price over Day 2 levels.
Good News for Idea Cellular in Punjab
Idea has announced that the Dept of Telecom has endorsed its merger with Spice Communications which was effected from 1st Mar/2010. The primary impact of this decision is that it allows Idea to provide 3G services to its
subscribers in Punjab, which was held in abeyance until now. Idea is an incumbent operator in Punjab.