Spectrum auctions in India continued to drift along the lines we have seen in the past few days. The blended prices of 900MHz now up 84% above reserve price levels. Pan-India 1800 prices have now moved up 22% above reserve price levels with excess demand continuing in a few circles.
The 900MHz Spectrum Auction Update
The provisional winning price (PWP; the only completely reliable indicator disclosed in end-of-day auction reports) for 900 spectrum in Delhi reached Rs 7.41 bn/MHz, 106% higher than reserve price. PWP in Mumbai stayed flat at Rs 5.63 bn/MHz, 72% higher than reserve price, while that in Kolkata too stayed flat at Rs 1.95 bn/MHz, 56% above reserve price.
You should note that these levels are already above the clearing per MHz price of 2100 MHz 3G spectrum sold in May 2010 and are only a shade lower than the Mar 2013 auction reserve price, a price that was summarily dismissed by the incumbents 11 months ago as being “too high”.
The 1800Mhz Spectrum Auction Update
Blended pan-India PWP price now stands at 22.2% above reserve price with a select few circles seeing sustained bidding action. These circles include Bihar/UP (West) (low supply), Delhi/ Mumbai (switch dynamics), Gujarat/Maharashtra (low supply + future-centric switch dynamics) in addition to others like West Bengal, MP, and J&K. The 1800 MHz PWP have also crossed the Nov 2012 clearing price levels in a few circles.
What is the Business Case for Reliance Jio Infocomm in this Scenario ?
We wonder on how does Reliance Jio build a business case on what could potentially look like a pretty large balance sheet before even having started operations, and can the Indian wireless industry create shareholder value or will it remain a conduit of value from consumers to the Government ?