Spectrum Auction saw tepid response from Telcos on Day 2

Seven telecom companies namely Bharti Airtel, Vodafone, Idea Cellular, Reliance Jio, Aircel, Reliance Communications and Tata Teleservices are in the fracas for attaining 3G and 4G airwaves. It is going to be essential for retaining competitive edge in the market and offering next generation services in the world’s 2nd largest telecom market.

The most important telecom operators Bharti Airtel, Vodafone India, Idea Cellular and industry newbie, Reliance Jio Infocomm kept cautious on the second day of spectrum auctions, with a total bid value moving up to Rs 56,792 crore on Monday because of demand for the broadly-used 1800 Mhz band, with the operators continuing to give the premium 700 MHz band a cold shoulder. Telecom circles which include Mumbai, Rajasthan and Gujarat faced higher bidding on the second day of the spectrum auction on Monday.

The auction on the first day had settled with bids worth Rs. 53,531 crore. With six rounds of bidding on Monday, the aggregate of rounds conducted so far stands at 11.

Sneak peek into Day 2

The 700 MHz band will hopefully remain unsold this auction on the back of high prices. After six rounds on Monday, the situation remained the same. The 4G bands of 2300 MHz and 1800 MHz, among the total seven on offer, attracted the most interest since market No. 2 Vodafone India and third-ranked Idea Cellular sought to increase their 4G holdings to bridge the gap with Airtel and Jio.

The 2300 MHz band was the centre of attraction but there was no bidding for the 700 MHz band, considered to be the best for 4G but isnot at all pocket friendly. The premium 700 MHz band was being auctioned at a reserve or base price of Rs. 11,485 crore per Mhz. This band alone has the capacity to gather bids worth over Rs. 4 lakh crore, if the entire spectrum in this band is sold at the base price. The government had conducted five rounds on day one on Saturday, mopping up Rs 53,531crore. No bidding in the premium 700 MHz band clearly shows that the operators are not willing to commit investments to the heavily priced band with (an) underdeveloped ecosystem.

The government has locked a pan-India reserve price of Rs. 2,873 crore per Mhz for spectrum in 1,800 MHz band; Rs. 3,341 crore for 900 MHz; Rs. 5,819 crore for 800 MHz; Rs. 3,746 crore for 2,100 MHz; Rs. 11,485 crore for 700 MHz, and Rs. 817 crore each for 2,300 MHz and 2,500 MHz bands.

More than 2,354.55 megahertz of frequencies have been put up for auction in seven bands which amounts to Rs. 5.63 lakh crore at base price.

The 2300 MHz, which has observed bidding across all the 16 circles where the band is on offer, saw a brawl for Gujarat where Bharti Airtel sought to buy the airwaves to add to its 4G portfolio. Heavy demand for the spectrum was seen in the Maharashtra circle. 

Bharti Airtel currently does not have 2300 MHz spectrum in Gujarat. While Maharashtra and Mumbai are strong circles for Vodafone which could be looking at the 2300 MHz band to enhance their capacity. The other 4G band, 800 MHz, saw demand in only four circles of Gujarat, Punjab, UP (East) and Rajasthan with Jio the likely main bidder, analysts said.

Demand was dull in the 2100 MHz band, initially used for 3G services in India and one where Bharti Airtel, Vodafone and Idea are eyeing to plug coverage gaps. So far, only eight of the 22 circles have seen bidding interest so far.

The 2500 MHz band also faced limited demand, in 10 out of 22 circles, with telcos using it as backup in case the 2300 MHz band price goes high.

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