Jio puts cat amongst the pigeons

18 Feb 2015

Newcomer Reliance Jio Infocomm (RJIL) is continuing to scare industry incumbents, having submitted the highest earnest money deposit (EMD) amongst the bidding cellcos for the upcoming spectrum auction. The Economic Times writes that RJIL has put down INR45 billion (USD722.45 million), signalling its intention to bid aggressively in next month’s spectrum sale. With reserve prices already high, aggressive bidding from RJIL will prove costly for incumbent cellcos, four of which – Vodafone India, Bharti Airtel, Reliance Communications (RCOM) and Idea Cellular – will be fighting to renew expiring licences in circles where they have no other spectrum holdings and face being forced to close down operations if they fail to secure the necessary frequencies. The newcomer, which is backed by petrochemical giant Reliance Industries and is expected to launch 4G services in June this year, trumped its rivals in terms of EMD, with Airtel putting down INR43.36 billion and Idea Cellular INR40 billion.

Commenting on the development, an unnamed senior telecom official was quoted as saying: ‘This has now become too serious a game. One can’t be naive to think Jio will only bid to push up prices. They could make a serious play in 800MHz and even in 900MHz for that matter, which is not what many people expect.’

In a related development, the Supreme Court, at the behest of the government, has directed all High Courts not to interfere with the spectrum auction rules. The announcement follows a court ruling last week in which Airtel and RCOM were granted permission to bid for the 4.4MHz of spectrum that they currently use, despite the fact that it is less than the minimum 5MHz set out in the auction rules. The duo pointed out that as the total amount of spectrum on offer was 8.8MHz, if one bidder secures the minimum amount, the rest would go to waste.