Even though the position of the incumbents is that auctioning 900MHz is illegal, TRAI’s proposed base price cuts make it reasonably priced. In Delhi, Airtel and Vodafone are very dominant (35% and 28% Revenue Market Share). They would place a much higher value on 900MHz retention than a challenger like Idea (11.6% RMS) or a Zero company like Reliance Jio Infocomm [0 Revenues] would place. The incumbents’ desperation to retain 900 and ensure continuity of operations would outweigh the price that a new entrant would be willing to pay. Thus expect incumbents to retain their entire 8MHz 900 holding in Delhi in the best case. In the worst case, the two incumbents would share 16MHz of 900 with a third player.
900MHz Spectrum doesn’t mean High RMS
Incumbency advantage is hard to shake off. For instance, Idea is still 4th in Karnataka after many years despite 900MHz spectrum. Tata DoCoMo, Uninor etc. have been unable to establish themselves and knock incumbents off. Hence acquiring 900MHz in Delhi at a relatively higher price to challenge incumbents may not lead anywhere.
3G Spectrum in 2.1GHz May Also be Auctioned
It is expected that three blocks (2x15MHz) of 2100MHz 3G spectrum from defense will be free very soon. This 2100MHz spectrum will also be auctioned, and hence from a 3G perspective that is one more available choice which means that there is little need to bid aggressively for 900MHz and after a material downward of reserve price revision it will present a very good alternative for Idea and others for 3G in Delhi / Mumbai.