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Spectrum

Indian Telcos Ignore Premium 700MHz, 900MHz Spectrum

India's telcos are continuing to ignore the 700MHz and 900MHz spectrum bands during a government frequency auction that is the largest the world has ever seen.

At the end of Tuesday, the second day of the spectrum sale, bids had reached a total of 568.72 billion Indian rupees ($8.54 billion), up from INR535.21 billion ($8.04 billion) a day earlier, with most of the activity focused on the 1800MHz spectrum band. (See India Preps for Mega Spectrum Auction in September.)

Strong demand for 1800MHz spectrum has been seen in the circles (or service areas) of Haryana, Kolkata, Mumbai, UP (East) and UP (West). Demand has even exceeded supply in Mumbai and UP (East).

India's government is selling nearly 2.3GHz of spectrum across the 700MHz, 850MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands. The auction could fetch authorities as much as INR5.6 trillion ($82.4 billion), more than five times the amount raised in India's last spectrum auction.

In total, seven telcos -- Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Vodafone India , Idea Cellular Ltd. , Reliance Communications Ltd. , Tata Teleservices Ltd. , Aircel Ltd. and Reliance Jio -- are participating in the auction of spectrum that could be used with both 3G and 4G services.


For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.


The government had been hoping that most revenues would come from the sale of 700MHz spectrum, attaching a base price of about $1.7 billion per MHz to these airwaves. That met with a backlash from Indian operators, however, which complained that fees were exorbitant given the lack of a sophisticated 700MHz ecosystem in India.

"The auction is on the expected lines," said Prashant Singhal, global telecom leader at Ernst & Young, at the end of day one. "We should see some intensity over the next day or so and closure of the auction within the next week."

Nevertheless, huge industry debts mean that bidding activity is somewhat restrained. Vodafone and Idea, for instance, are likely to bid aggressively only in those areas where they currently lack 4G spectrum.

By adding to the financial pressure on telcos, the auction could even act as a catalyst for consolidation. Smaller players like Videocon Telecommunications Ltd. and Telenor Group (Nasdaq: TELN)'s Indian subsidiary have chosen not to participate in the sale and are looking to exit the market. And with base prices so high, other smaller players will struggle to acquire the spectrum they need to launch next-generation services.

— Gagandeep Kaur, contributing editor, special to Light Reading

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