The government yesterday cleared the auction for 900MHz Spectrum. In Delhi 900 auctions (16MHz on offer), holders Airtel and Vodafone should shut out challengers and each retain their entire 8MHz. It’ll be surprising to see if they reduced their stakes let a new holder take a head start in 900 3G. However, in Mumbai, Loop’s 8MHz will likely be converted to 3G by the winner.
Idea has just 20% as much spectrum [4.4 MHz] as Airtel in Mumbai despite half the revenue [Airtel 1800 / 2100 and 2300MHz combined together has 34.2 MHz]. Part of Airtel’s 1800 is also usable for 4G LTE. Since Mumbai 900 is likely more expensive than 2100MHz but the key issues are OPEX+CAPEX and the Waiting Time Period for commissioning. If Idea waits for 2100 Mhz Spectrum Auction in Mumbai, then it will save upfront on the cost but its Tower CAPEX will be twice than that of deploying 3G network in 900Mhz .
With most 3G handsets supporting UMTS 900 band [You may have read something like this on the SmartPhone Spec – HSPA+ (850 / 900 / 1900 / 2,100MHz) support ] , bidders can start their 3G operations in 900 (especially if they are not holders, since holders will have to remove their 2G equipment first before inserting 3G in that spectrum).
With auction rules suggesting that a renewal licensee/new entrant should bid at least for 5MHz and that a telco should not hold more than 50% of spectrum in a band (22MHz is the total 900MHz spectrum availability including MTNL’s spectrum due in 2017), a telco can bid between 5-11MHz.
How Vodafone and Potentially Idea Can Offer 3G in 900MHZ band in Mumbai ?
Loop Telecom’s 8MHz will likely be won by a new bidder (Loop itself is not expected to renew). Of this, we expect Vodafone to bid for 2MHz (in addition to retaining its current 8MHz). That would still leave a 5MHz slot available for another player. Since this player would use 900 for 3G, we believe Vodafone will make sure its holding increases from 8MHz to 10MHz so that 5MHz can be deployed for 3G without upsetting the entire existing 2G network.