The Government is likely to announce the Largest Telecom Spectrum Auction in the History of India in the next couple of months. Notice Inviting Applications is not out yet and sources in DoT indicate a delay of Month.
Of all the spectrums auctioned – 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz, we see more demand for 1800 Mhz (4G) and 2100 Mhz (3G) bands mainly by the top telcos to bridge their 3G/4G gaps. We do not see much demand for 700 Mhz and 2500 Mhz bands given higher pricing / weaker eco-system. We expect the harmonized 1800 Mhz spectrum also to be included in the auction despite harmonization process progressing slowly. In our view, even if harmonization process in not complete, DOT will auction the spectrum and complete the pending harmonization post that. Without the harmonized 1800 Mhz spectrum we see limited spectrum demand in the auction.
Bidding to be Rational – We expect rational bidding by telcos in the upcoming auction as unlike in the past few auctions, telcos are not bidding for any renewal spectrum (which forced them to buy the spectrum despite high auction price).
How Operators are Expected to Bid in Biggest Telecom Spectrum Auction – 2016 ?
With already established ecosystem of 4G spectrum in other bands like 1800/2300, we expect limited demand for 700 MHz given Abnormally Higher pricing (US$ 8.5bn) for pan India 5MHz 700 spectrum.
Airtel & Reliance Jio will bid selectively for 700 Mhz spectrum in few B and C circles due to relatively lower pricing in these areas. In the coming years we expect the top telcos to purchase 700 Mhz as currently they do not have any 4G spectrum below 1000 MHz (good coverage spectrum) while Jio has (850 MHz).
Harmonized 1800Mhz band will witness some hectic bidding from Airtel, Vodafone and Idea cellular if their backdoor Mergers & Acquisition talks fail to reach a consensus.