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Jio, Airtel, Vodaphone- Who will win Spectrum Auction War?
The largest ever spectrum auction of India kick started by
receiving bids of Rs 53,531 crores on Day 1. Leading Indian
telcos of the nation including Bharti Airtel, Vodafone India,
Idea Cellular and newest kid of the block who shook the very
foundation of its existing peers, Reliance Jio Infocomm, set the
ball rolling on day one of the largest ever spectrum sale with a
high bid, though the coveted 700 Mhz bandwidth has not seen
any interest.
The ruling giants of the telecom sector Bharti Airtel, Vodafone India and Idea Cellular are
all pitted against the newcomer Reliance Jio Infocomm battle for airwaves to boost their
high-speed data services in the world’s second-biggest market by mobile phone
subscriptions.
What drew the Maximum Attention?
The coveted 700 Mhz bandwidth didn’t see any interest.
The ones in the demand were 1800 Mhz and 2300 Mhz bands - both used for 4G. These
saw the most bidding interest after five rounds of bidding on Saturday, 1st October 2016,
according to data issued by the telecom department on the same day.
The 2300 Mhz hit the market for the first time since its sale in the year 2010. This was
among the most sought after with a three-cornered fight between the giants- Reliance Jio,
Airtel and Vodafone, all vying for the 4G bandwidth which gives large coverage. The band
drew bids worth Rs 15,390 crores, a source familiar with the auction said, which just over
a third of the total is bid value.
The 1800 Mhz saw intense bidding in the Mumbai and Maharashtra circles, a zone where
Tata Teleservices’ unit Tata Teleservices Maharashtra’s airwaves are coming up for
renewal in the year 2017. Other circles including Haryana, Kolkata, Rajasthan as well as
Uttar Pradesh East too, witnessed excess demand.
The other 4G band, 800 Mhz – saw bids leading to excess demand in only four circles
namely, Gujarat, Punjab, Rajasthan and Uttar Pradesh East. Demand was unenthusiastic in
the 2100 Mhz band, primarily used for providing 3G services in the country, and one
where top telecoms such as Bharti Airtel, Vodafone and Idea Cellular are looking to plug
coverage gaps.
The 2500 Mhz band too witnessed limited demand, with telecoms using it as a backup in
case the 2300 Mhz band price goes high.
The premium band of 700 Mhz which is to be auctioned at a reserve or base price of Rs
11,485 crores per Mhz did not get a warm welcome. The cost involved of delivering
mobile services in this band is estimated to be around 70 per cent lower than 2100 Mhz
band which is used for the 3G services.
What to expect from today?
Today (Monday) each round will be of 60 minutes as compared to the 90 minutes round
held on Monday.
According to Prashant Singhal, global telecom leader, the auction is on the expected lines.
The auction saw no bidding interest on 700 MHZ and 1800 MHZ and that too in the circle
where some shortage has been witnessed. One should see some intensity over the next day
or so and closure of the auction within the next week.
The Largest Spectrum Auction
India has put on sale the largest-ever spectrum where mobile airwaves are worth Rs 5.63
lac crores. As much as 2,354.55 megahertz (MHz) of frequencies amounting to more than
the cumulative spectrum holding of the top four operators – were put up for auction in
seven bands including the 4G bands of 700 Mhz, 800 Mhz, 1800 Mhz, 2300 Mhz and
2500 MHz, as well as 3G bands of 900 Mhz and 2100 Mhz.
According to the set rules, companies winning spectrum in higher frequency bands - above
1 Ghz like 1800 Mhz, 2100 Mhz, 2300 Mhz – are suppose to make 50 per cent upfront
payment and the rest of it in 10 years after a 2 year moratorium. In earlier auctions,
companies were given the option to make an upfront payment of 33 per cent.
For spectrum below 1 Ghz band such as 700 Mhz, 800 Mhz as well as 900 Mhz, the
companies will require to pay 25 per cent upfront and the rest of the amount in 10 years
after a 2 year moratorium.
The Government has fixed a pan-India reserve price of Rs 2,873 crores for spectrum in
1,800 MHz band, Rs 3,341 crores for 900 MHz, Rs 5,819 crores for 800 MHz, Rs 3,746
crores for 2,100 MHz, Rs 11,485 crore for 700 MHz and Rs 817 crores each for 2,300
MHz and 2,500 MHz bands.
The sale has resumed today, however we will not get anymore carrier-specific bidding data
until the end of the auction from the DoT (Department of Telecom).
Read more about Auction Specturm in “Spectrum Auction Begins Today, Target 5.6
Lac Cr”.
Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision. Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022
Disclosure Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment Advisory Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on for certain operational deviations. Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research Analyst/ his Relative:
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Article Written by Nabarupa Kanjilal