One of the surprise bidders at this exuberant price of Spectrum is Videocon Telecommunications. Videocon on its website lists as a $5Bn conglomerate but if you see the market capitalization of its flagship Videocon Industries, it is mere $1Bn and add another $1Bn for its unlisted energy ventures, that’s it. Everybody in the market knows which Politicians of Maharashtra have backed this company for vested interests 😉
So the question remains, on whose behalf is Videocon bidding ? In my opinion it is none other than Reliance Industries Ltd headed by Mukesh Ambani. Reliance Infotel Broadband already has 4G / LTE Spectrum in 2300 MHz band for Data Services. However, 4G / LTE Data only service [VoLTE] is atleast 3 years away in India to be a mass market. Thus, Mukesh Ambani has no choice but to offer complete bouquet of Wireless Services including Voice. Another strong reason to believe that Mukesh Ambani is backing Videocon is due to the fact that it has shown fresh interest in 800MHz band which is likely to be used for Data Services complementing 2300MHz LTE Spectrum.
Earlier in August, during the course of my research, I was probably the first to publish a bid strategy where it made sense to Bid for Bottom 16 Telecom Circles in India which contribute 62% of Wireless / Mobile Subscribers. According to DoT, Videocon has submitted its bids for 17 Circles in 1800MHz band and 10 Circles in 800MHz band. I am reasonably sure that 17 circles will include the Bottom 16 [count 1 to 16 from Bottom in the chart] and likely Maharashtra.
Do you have any take ?
Participation of Reliance backed Videocon in the auctions should ensure the success of the auctions.
Post Auction, Reliance entry into voice segment will ensure competitive intensity remains high against popular perception that competition will fall post auctions and Mukesh Ambani will continue to remain as threat to incumbent business models over longer term.
Now videocon is out of spectrum race what RILs next strategy?