The government has not received any interest for the next auction round for the 1800 MHz/900 MHz, which was supposed to commence on 11 March 2013. The government was slated to auction 900Mhz spectrum in 3 metros (Delhi, Mumbai & Kolkata) and 1800Mhz in 4 markets (Delhi, Mumbai, Karnataka & Rajasthan). The 900MHz spectrum in the metro markets is currently held by incumbents whose licenses are due for renewal in Nov/2014. The 1800MHz spectrum in the four markets was being re-auctioned after a 30% cut in
reserve price as the previous auction (in Nov/2012) had failed in these markets
While the industry’s decision to abstain might be linked to the ongoing legal challenge to the 900 MHz auctions, we see it as a clear sign of the industry’s rational stance on spectrum bidding and voice tariffs. The absence of any new entrants especially Reliance Jio Infocomm is also a positive.
MTS Sistema is the Only Bidder for 800Mhz Spectrum and that too in selected circles only. Will the DoT allot Spectrum to MTS or will it call off the auction needs to be seen.
The regulatory cost computation comprises – Excess spectrum charges (for which demand has already been sent by the government) and NPV of the spectrum renewal and refarming charges, which values the entire spectrum (each circle at the time of the respective renewal) assuming 900 MHz price at 2x the 1800 MHz price.
Though the absence by GSM incumbents in 900 MHz could be linked to their ongoing legal challenge to refarming, we see it as a further sign of rationality in the industry, which could potentially lead to further reduction in the reserve prices by the government.