Spectrum auction nets USD9.9bn despite conservative bidding

7 Oct 2016

India’s largest-ever spectrum auction fell short of the government’s expectations as high prices deterred operators from bidding for sought-after airwaves in the 700MHz band. The Economic Times writes that, after six days of bidding, the seven participating cellcos spent a combined total of INR657.89 billion (USD9.87 billion) on 964.8MHz of spectrum but this equated to less than half of the more than 2,300MHz of airwaves on offer, and just over a tenth of the INR5.6 trillion reserve price of all the available frequencies. The 700MHz band, which was made available for the first time in the auction and carried a price tag of more than INR4 trillion for the entire holding across all 22 circles, saw no interest from the bidders. Instead, bidding was fiercest around the 1800MHz, 2100MHz and 2300MHz bands as cellcos sought to bolster their 4G-compatible spectrum holdings but even here supply greatly exceeded demand and large quantities of frequencies went unsold: only around 75% of the available spectrum in the 1800MHz range was sold, whilst that proportion was a surprisingly high 60% for the 2500MHz band, 34% for 800MHz frequencies and just 20% for the 2100MHz band.

Telecom Secretary JS Deepak was quick to claim that the auction had therefore satisfied the market’s need for airwaves, declaring that: ‘Spectrum scarcity in the Indian telecom industry is now a thing of the past.’ Airtel’s CEO, however, made it clear that the excessive pricing of spectrum was the deciding factor in the operators’ decision to curb their bidding, and urged the ministry to lower the cost in the future, particularly with regard to the 700MHz band. ‘Three to four national operators with robust 700MHz-based broadband networks have the potential to accelerate India’s progress to the top league of digitally enabled nations,’ the official explained, adding: ‘Therefore, the pricing of the 700MHz band spectrum needs to be addressed on priority for the nation to benefit from the digital dividend arising out of this high-quality spectrum band.’

Full details of the spectrum allocations have yet to be published for all of the operators, though the following operators have confirmed their allocations and spending: Vodafone India secured a total of 365.2MHz in the 1800MHz, 2100MHz and 2500MHz bands for INR202.8 billion; Bharti Airtel paid INR142.4 billion for its 173.8MHz in the 1800MHz, 2100MHz and 2300MHz ranges; Reliance Jio Infocomm (RJIL) bought 269.2MHz in the 800MHz, 1800MHz and 2300MHz bands, paying a total of INR136.7 billion for the airwaves; and Idea Cellular acquired a total of 349.2MHz in the 1800MHz, 2100MHz, 2300MHz and 2500MHz bands for INR128.0 billion.