The Indian government will receive a Rs611.61bn (US$9.8bn) windfall from a spectrum auction which ended today.
Telecoms minister Kapil Sibal described the auction as a success for the government, telling reporters that “we will see a smile on the face…
The Indian government will receive a Rs611.61bn (US$9.8bn) windfall from a spectrum auction which ended today.
Telecoms minister Kapil Sibal described the auction as a success for the government, telling reporters that “we will see a smile on the face of the finance minister”.
India had initially expected to raise at least US$1.8bn from this carefully-watched auction. A previous auction, in March last year, was a disaster after only one bidder took part. Most other operators had complained prices were too high.
This time, although the prices were higher than those recommended by the regulator, they were lower than the ones proposed by the telecoms ministry and below the 2013 prices.
At launch on 3 February, eight players started submitting offers for spectrum in the 900 MHz and 1,800 MHz bands. By the end of the first day, bids had already reached Rs446bn (US$7.1bn).
Reliance Jio Infocomm, the telecoms unit of conglomerate Reliance Industries, joined Bharti Airtel, Aircel, Idea Cellular, Tata Teleservices, Uninor, Vodafone India and Reliance Communications (RCom) in the auction.
All were eligible to bid in India’s 22 service areas apart from Vodafone and RCom, which reportedly did not submit the required documents for certain areas.
Newcomer Reliance Jio, owned by billionaire Mukesh Ambani, was expected to bid aggressively to become a disruptive force in India’s crowded mobile market. For most other operators, acquiring frequencies will allow them to either renew their expiring licences or fill their coverage gaps.
According to provisional results published by the telecoms ministry, Tata Teleservices was the only operator that failed to secure some spectrum. There has been speculation that some shareholders in Tata Tele are looking to sell the company.
Key results
- Vodafone India reportedly spent Rs196bn (US$3.15bn) on additional spectrum in the 1,800 MHz in 11 circles and retained its 900 MHz spectrum in Mumbai, Delhi and Kolkota where its licences were due to expire. UK’s Vodafone recently received regulatory approval to buyout its Indian unit. The company, which will have a significant war chest once its US$130bn stake sale in US JV Verizon Wireless has closed, said it would pay Rs56bn (US$900m) upfront for the frequencies.
- Meanwhile, Uninor acquired additional spectrum in the 1,800 MHz band in four of its six existing service areas as well as in a new area for a total Rs8.5bn (US$135.7m). The company, owned by Norwegian telco Telenor, said the new spectrum will allow it to improve its voice and data capacity by up to 25% in the four circles. Head of Telenor Asia Sigve Brekke added that Uninor is “now well positioned to continue its growth path” in India. Last year, Telenor ended its joint investment in India with local real estate group Unitech following a bitter dispute. It has since found a new partner in Lakshdeep Investments & Finance and owns 74% of Uninor.
- The country’s largest operator, Bharti Airtel, bought 115 MHz of spectrum for Rs185.3bn (US$3bn). Its upfront payment will be Rs54.25bn (US$871m). The company plans to use the 1800 MHz spectrum to roll out 4G networks in several service areas. While it praised the 1800 MHz auction, which “showed a balanced approach between the revenue for the exchequer and industry viability”, Bharti criticised the 900 MHz auction. “The auction in 900 MHz band resulted in artificial and unrealistic prices on account of shortage of spectrum and the unenviable position of the incumbents who were forced to bid for this spectrum to protect the interest of their customers and the huge investments made by them,” the company said in statement.
