Idea Cellular the Pure Play Wireless Telecommunications service provider in India is inching closer to 1800MHz PAN India Spectrum as the Auctions began this morning.
Why Kumar Birla Pomoted Idea Will Bid Aggressively in Spectrum Auction ?
Idea Cellular is promoted by Aditya Birla Group. A.V.Birla’s Management DNA is very well percolated down to every group company including Idea Cellular, the one I have been tracking very closely. Aditya didn’t believe in Manipulating Policies like Dhirubhai Ambani or Mukesh Ambani [Reliance Group]. If Indian Government didn’t want to give Aditya licenses, he wasn’t deterred and established industries outside India. Like wise, Kumarmanglam Birla is unmoved by the untouchable treatment given to Idea Cellular by Corrupt Government / Bureaucrats and prefers to fight it in the marketplace by offering competitive services.
The erstwhile Corrupt Telecom Minister of India created hurdles in the way for Idea for approving Spice Telecom takeover / merger and more hurdles over the issue of overlapping licenses. Idea Cellular is engaged in a legal battle which will take its own course of time, but then it’d lose the business opportunity and hence the aggressive Bidding for 1800MHz Telecom Spectrum.
What is Idea Cellular’s 1800MHz Mobile Spectrum Strategy ?
Idea Cellular’s licenses were cancelled in only 7 circles [indicated in Red in Chart Below]. However, the Earnest Money that it has deposited is good enough for Idea to win 5 MHz of Spectrum in 7 circles and 2.5 Mhz of Spectrum in remaining circles.
The Following Chart Shows Idea’s PAN India Spectrum Allocation in 900MHz Band and 1800MHz Band
Idea Getting Ready for Refarming In the chart above you see that Idea has 900MHz spectrum in 9 circles. Based on Idea’s bid, the company wants to escape the Regulatory hurdle over 900Mhz Spectrum refarming which is ridiculously priced and DoT ready to snatch away Idea’s already existing spectrum over 2.5 MHz. OR Idea has to participate in the 900Mhz Spectrum auctions again to retain the same. Thus Idea is planning to acquire 2.5MHz of 1800 band additional spectrum in existing license areas and continue to provide service, though at an additional CAPEX cost.
Also Spectrum acquired in this auction will be valid for 20 years from now. If the Mobile LTE / 4G Broadband eco-system were to develop around 1800MHz, then it is certain that 1800 band will get expensive, thus Idea would have made a smart move to get this chunk early.
Delhi / Mumbai Bidding Dropped as Prices are Exorbitant
CDMA Spectrum priced at 1.3x didn’t even attract a single bid even in Bottom 5 circles implying that the reserve price was a bit too high. 1800MHz band is really expensive in Delhi & Mumbai circles, as already discussed. Since the auction is underway, let us keeps fingers crossed to see if Delhi & Mumbai have attracted bids or not.
Idea’s Data Strategy is also evolving with subsidized 3G Data Plans with Voice. Idea has also indicated that 700Mhz Spectrum Auction should be put away at least until 2015 thus indicating it wants to remain a Pure-Play Wireless Telecom Operator.