India’s and possibly World’s Biggest Telecom Spectrum Auction will go live on Oct 1st, 2016 amidst tepid demand from existing Indian operators. Global Telcos give it a miss due to fresh memories of Spectrum Scam and constantly changing policies with motive of massive corruption. The spectrum bands put to auction include 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz, and 2500MHz, constituting a total of 2,355MHz of spectrum, with the largest chunk in the most sought after 700MHz band suitable for 4G and 5G Wireless Broadband.
Barring few circles, we expect most of the spectrum to be sold at current reserve prices and all of 700MHz to remain unsold, unless Jio changes its strategy. 3 or 4 carrier slots are available in the 2100MHz band on a pan‐India basis, getting 3G airwaves at the reserve price looks almost certain. 4 or 5 carrier slots are also made available in the 2300MHz and 2500MHz spectrum bands across most circles in the former and all circles in the latter band.
Possible Bidding strategies based on EMD
Airtel already has pan‐India 3G (excluding Kerala circle) and 4G footprints, it is likely to shore up its spectrum holdings in its circles of importance (where its market share is higher than 30%). The company might bid in the 1800MHz band in Assam and West Bengal circles. In 2300 MHz, it might bid for Gujarat circle. It will bid for 2100MHz in the Kerala circle to complete its pan‐India 3G footprint. Based on these bids, we see its total auction expenditure not exceeding Rs 21bn
Vodafone with 4G presence only in nine circles, we foresee Vodafone being the most aggressive bidder in the upcoming auction. The company’s focus will be on plugging the gaps in its missing pan‐India 3G and 4G footprint. It is also rumored to be in talks to acquire Uninor / Telenor India.
Idea’s priorities would be twofold – 1) to have a presence across technologies in its eight leadership circles, and 2) either have 3G or 4G presence in the remaining 14 circles. For 4G, it would want to have 5MHz contiguous spectrum in the 1800MHz band for its leadership circles like UP (W) and Gujarat.
Reliance Jio surprised everybody with the highest amount of earnest money deposit. Jio is focused on building a 100% IP‐enabled 4G network, it would like to have 5MHz contiguous spectrum on a pan‐India basis in the sub‐gigahertz band. JIO will bid for one block (i.e. 1.25MHz) in the 800MHz band in 10 circles to have a pan‐India 5MHz contiguous spectrum. Similar to its spectrum in the 800MHz band, it might want to have 5MHz pan‐India spectrum in the 1800MHz band. Hence, JIO might bid in the 1800MHz band in four circles (Bihar, JK, Punjab, UP (W)).
Flip Flop Telco, Tata Tele Services is likely to bid in the 800MHz band in Mumbai and Maharashtra circles and in 1800MHz in Maharashtra and AP. RCOM and Aircel are unlikely to be serious bidders in the auction – evident from the EMDs made by both.