Spectrum worth Rs.5.63 trillion at the base price will go under the hammer in India’s largest auction of mobile airwaves, the government said on Monday. All these airwaves can be used to offer high speed broadband services. “It’s very unlikely that Vodafone, despite its modest 4G spectrum holdings among incumbent carriers, will target a large dose of 700 MHz airwaves as it would throw up network planning and integration challenges as it doesn’t make sense to run a countrywide 4G network on multiple spectrum bands, especially since the company already has 4G airwaves in the 1800 MHz band”, Soni told ET.
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Rajan Mathews, director-general of Cellular Operators Association of India (COAI), expects telcos to buy airwaves worth close to Rs 2.5 lakh crore in these auctions. The is a premium band for airwaves as cost of providing services in it is one-third the cost of 3G services in the 2,100 MHz band.
The government has chose to allot the right to the spectrum won through auction for 20 years.
The government expects telecom companies to bid aggressively in the auction as they seek to improve the quality of their service. The total quantum of spectrum being put up for auction includes about 197 MHz in 1,800 MHz band and 37.5 MHz in 800 MHz band (CDMA band). “We will wait for the auctions to see what the response is”, Deepak said. “We see relatively good demand for 1800 Mhz band, some demand for 2100 and 2300 Mhz band”.
For spectrum in the 900 MHz band, 800 MHz band, 2100 MHz band and 2300 MHz band, the reserve price was fixed at ₹3,341 crore, ₹5,819 crore, ₹3,746 crore and ₹817 crore, respectively.
Idea’s Kapania said the carrier was transforming from a voice operator to a voice and data network and that it meant to “get assets as we aim to enter the new market”. Among the measures is speedy allotment of airwaves (winners will be allotted spectrum within 30 days of making the upfront payment), reduction in the promoter’s lock-in period from three years to one year and simplifying the rollout obligations.
“The operators will choose spectrum based on availability, pricing and the band which will fit to their current spectrum holdings”, said consulting firm Deloitte.
The government has also reduced interest on instalments to 9.3 per cent from about 10 per cent earlier. “To this end, this auction is a critical test of the operators’ rationality; an auction where operators need to guard against getting swayed by competitive spirits and bid with long-term interests in mind; no self-goal, in other words”, the brokerage added. Rest of the bid amount can be paid after a 2-year moratorium period in 10-year installments.
“The reserve price of the 700 MHz band is at 4x (four times higher than) the reserve price of 1,800 MHz”. Now the roll-out obligation shall be treated as fulfilled once the required numbers of district headquarters or block headquarters are covered by use of any technology in any band.
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The government has modified method of calculating spectrum cap in a circle in a way that will allow companies to hold more spectrum compared to earlier levels. While the SUC has been determined at 3% of adjusted gross revenue for the spectrum to be auctioned, a weighted average SUC has been decided upon for spectrum in use with a floor price of 3%. The pre-bid conference for the sale will be held on August 13; the last date for applications is September 13, and the deadline for withdrawing applications is September 22.
