The Indian government is likely to lower the reserve price for spectrum in next month’s 2G auction, having failed to attract interest from operators.
There were reportedly no applicants for the GSM bandwidth, while Russian conglomerate Sistema’s…
The Indian government is likely to lower the reserve price for spectrum in next month’s 2G auction, having failed to attract interest from operators.
There were reportedly no applicants for the GSM bandwidth, while Russian conglomerate Sistema’s Indian telecom subsidiary was the only applicant for the CDMA band by yesterday’s deadline.
Analysts told TelecomFinance that something would need to change to attract the operators. “Companies found the reserve prices too expensive,” one analyst at an Indian brokerage said today. “The CDMA auction last November set a precedent, as there was a lack of bidders and the government brought down the reserve price. There is an expectation that the same thing will happen now.”
Another analyst affirmed that prices are too high and are deterring the industry. “I think the Department of Telecommunications will go back to the Empowered Group of Ministers to change either the rules or the reserve price,” he commented.
A lowered reserve price would be good for the share price of Indian incumbents such as Bharti Airtel, Vodafone India and Idea Cellular, the analysts agreed. “A lot of their future cash outgoings are regulatory levies, which is linked to the auction price,” said one. “So if the price is lowered, cash-outgoings will be lower which is positive for the stock price.”
Bharti Airtel, Vodafone India and Idea Cellular were unavailable for comment.
