Indian Operators Plot Spectrum Auction Moves

Due to get underway next week, India's biggest-ever spectrum auction is likely to witness some aggressive bidding by players keen to satisfy Indian consumers' growing appetite for mobile data services. A whopping 380.75MHz of spectrum in the 800MHz, 900MHz and 1800MHz will be up for sale, along with another 5MHz of 2.1GHz spectrum in 17 of India's 22 circles (service areas).

Experts reckon bidding is likely to be at its fiercest in the 900MHz band. "Existing holders would want to renew at all costs," says Rohan Dhamija of market-research firm Analysys Mason. "Additionally, some operators that do not have 900MHz and also do not have 3G in certain circles, but have high revenue market share, could bid aggressively for 900MHz in those circles. RJio [Reliance Jio Infocomm] could also look to push up the prices of 900MHz."

The earnest money deposited (the amount that service providers deposit in the form of bank guarantees) by the participants is also a sign that bid prices could rocket. Earnest money usually ranges from 16% to 25% of the reserve price in a circle, but auction participants have deposited a total of 204.35 billion Indian rupees ($3.3 billion). (See Spectrum Pricing Provokes Jitters in India and table below.)

Table 1: Earnest Money Deposited by Major Players

Service provider Earnest money deposited
Reliance Jio $727M
Bharti Airtel $701M
Idea Cellular $646.9M
Vodafone India $598.4M
Reliance Communications $190M
Telewings $117.2M

Below we assess the specific issues confronting each of these main players.

Reliance Jio
Though yet to launch services, Reliance Jio already owns 2.3GHz airwaves covering the entire country as well as 1800MHz spectrum in 14 circles. Judging by the substantial amount earnest money RJio has deposited, the operator is looking at adding a significant amount of spectrum to its existing holdings during the forthcoming auction. (See Reliance Jio Entry Hots Up Indian Auction.)

Experts believe that RJio could be more interested in the 800MHz and 1800MHz bands than in other spectrum up for sale. "I think 800MHz, especially in four circles where contiguous blocks are available, and 1800MHz will probably be of most interest to RJio," says Analysys Mason's Dhamija. "They might also be looking to passively acquire some of RCom's 900MHz spectrum."

The company is planning to use a combination of 2.3GHz and 1800MHz spectrum to launch 4G services later this year. And while MTS -- which has decided not to participate in the auction because of high reserve prices -- was the only bidder for 800MHz spectrum in an auction last year, that band will have attracted RJio's interest because it is already being used to support 4G services elsewhere.

Next page: Other big spenders

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thebulk 4/25/2015 | 12:29:21 PM
Re: Further complicate @nasimson, that sounds like a horriblly over complicated system to have to deal with. 
nasimson 4/12/2015 | 11:52:07 PM
Re: Further complicate @theBulk:

> how do these circle roaming tariffs impact the end user? or is it just at the provider level?

Till sometime back there were inter-state long distance charges, inter-state roaming charges  and inter-operator inter-connects. That was also due to the fact that there were different telecoms operative in different circles.   
thebulk 2/28/2015 | 11:43:28 AM
Re: Further complicate @nasimson, how do these circle roaming tariffs impact the end user? or is it just at the provider level? 
Umesh Jamwal 2/28/2015 | 11:42:05 AM
Re: India Spectrum War chest weak without global players @nasimson....During Dot Com 1.0...the likes of Nynex, Bell canada, bell Atlantic, US West,AT&T,Enron, Global X-ings did evinced interest in the Indian telecom market.....then there was big "burst".....and the whole world gone topsy-turvy....till 2008.....

Bharti Airtel, Vodafone India, Idea Cellular, Reliance did tried to salvage the situation...but without the deep-pocketed global players global practices,mobile data growth trends implementation....Indian telco will still remain a voice centric market with ARPUs in the range of $5-10....To give further impetus to the mobile-date growth and to cross-subsidize the 'Ivy League" of smartphones....iOS,Android etc. India need badly the entry of the global telcos at the earliest.....Maximum growth will happen in the next 5 years only....
nasimson 2/28/2015 | 11:06:36 AM
Re: India Spectrum War chest weak without global players @Umesh: You make an intersting point. Some how nonUS global operators like Singtel,QTel, Etisalat, Duetsche Telecom, British Telecom have also not shared significant explicit plans for Indian market. Telenor got ridiculed when it said it would enter Indian market. Telenor went through some upheavels, but doing ok now. I wonder why global telecoms are reluctant?
Umesh Jamwal 2/28/2015 | 6:33:29 AM
India Spectrum War chest weak without global players Taking a cue from US FCC AWS Spectrum auction ended earlier this month,we really wonder why the likes of Verizon,AT&T,T-Mobile, Sprint, Dishnet etc. do not perceive India as the next stop.....post 1995 auctions...except the MTS,Telenor etc. none of the tier-1 telcos of the world....be it Orange,Telefonica, DT, TeliaSonera,MTN, have invested in the surging economy like India.....currently 1Bn Mobile subscriptions....and approx 200Mn Broadband subscribers....

It is high time, the global players has to be serious about Indian telco market and stay invested there....rather than just buying the spectrum and monetizing and exiting in a jiffy....AT&T, Verizon Wireless....Are you listening??
nasimson 2/28/2015 | 12:38:05 AM
Further complicate Indian telecom space is very complex due to many circles and circle-wide licences, circle-wide auctions and inter-circle roaming tariffs. These upcoming auctions can further complicate the industry dynamics if some operators loose spectrum rights in their circles.
thebulk 2/27/2015 | 9:30:32 PM
Re: Fun stuff No doubt that Vondafone will have the resources to build out better wireless infrastructor. With the population density in India there is no question that a reliable and robust network will be needed to support demand. 
SachinEE 2/27/2015 | 9:23:14 PM
Re: Fun stuff It really is a nice time for indian telecom. I think MTS understands that they would have to have enough market coverage to be bidding for a high spectrum to deply 4G. However I personally want Vodafone to win this bidding because they would have the proper resources to follow up with the acquiring of the bandwidth.
thebulk 2/27/2015 | 1:23:51 PM
Fun stuff WIth so much on the line this really could make for interesting times for Indian telcoms. I am visiting there later this year and will be interested poke aorund with a few of my contacts in the industry there and see what the tone is. 
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