The Indian government raised about Rs617bn (US$9.9bn) on the first day of its 2- and 3G spectrum auction.
The 900 MHz band, currently used for voice services but capable of carrying 3G data, generated particularly strong interest during the first six…
The Indian government raised about Rs617bn (US$9.9bn) on the first day of its 2- and 3G spectrum auction.
The 900 MHz band, currently used for voice services but capable of carrying 3G data, generated particularly strong interest during the first six bidding rounds, according to Department of Telecommunications (DoT) data.
Eight operators are vying for 20-year allocations in the 800 MHz, 900 MHz, 1800 MHz and 2100 MHz bands. The government has said it aims to raise at least Rs648.4bn (US$10.2bn), but experts predict the figure could rise to US$13bn or even US$14bn as supply is limited.
The government will not reveal individual companies’ bids until the auction concludes, which could take days or weeks depending upon the intensity of competition.
Asian brokerage and investment group CLSA said in a report following the first day’s bidding that the reserve price for 900 MHz spectrum had already been exceeded by 32%, with excess demand in five out of 17 telecoms service areas.
According to the firm, spectrum in the 1800 MHz and 2100 MHz bands saw price increases of just 1-2%, with no bids in some key service areas, while the 800 MHz band saw price rises in just two circles.
The bidders include the country’s four largest mobile players – Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communications (RCom) – as well as smaller rivals Tata Teleservices, Uninor, Aircel and new entrant Reliance Jio Infocomm.
Fitch Ratings expects the top four telcos to contribute more than 75% of the total funds raised. It predicts the top three players – Bharti, Vodafone and Idea – will spend US$2.5bn-US$4.5bn each to renew expiring spectrum in certain telecoms service areas and acquire new airwaves to support growing demand for data services.
The agency expects most telcos’ net debt will increase as a result of spectrum fees, although the crowded market limits their ability to raise prices, particularly in light of Reliance Jio’s impending entry.
Most telcos have already raised equity or monetised assets in preparation for the auction, the agency added.
Notable absentee MTS India, controlled by Russian conglomerate Sistema, said it would not take part in the auction as it believes the reserve price for 800 MHz spectrum is too high. The operator has also sought arbitration to get DoT to rearrange frequencies it acquired in the March 2013 auction.
Struggling state-controlled telcos BSNL and MTNL are also not taking part.
The limited amount of spectrum on offer and high reserve prices have attracted widespread criticism from industry players, including Vodafone CEO Vittorio Colao, the Telecom Regulatory Authority of India (Trai) and international mobile operators association GSMA.
