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