India's Mega Spectrum Sale Garners $17.5B
India's mega auction of spectrum has finally wrapped up, with bids reaching INR1.09 trillion ($17.5 billion) after 19 days and 115 rounds. (See India's Spectrum Sale Shatters Records and India Spectrum Bids Trigger Debt Fears.)
The process saw eight operators -- including Aircel Ltd. , Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Idea Cellular Ltd. , Reliance Communications Ltd. , Reliance Jio, Tata Teleservices Ltd. , Uninor and Vodafone India -- bid for a total of 380.75MHz in the 800MHz, 900MHz, 1800MHz and 2.1GHz spectrum bands. (See Indian Operators Plot Spectrum Auction Moves .)
Given the high reserve pricing, it is not surprising the auction proceeds were so high. But experts have warned that operators may pass high spectrum fees on to their customers.
"The increased financial burden will lead to the industry's cost structure being changed drastically," said Rajan S Mathews, the director general of the Cellular Operators Association of India. "Hence, the operators will not be left with much choice but to increase the tariffs so as to meet the financial commitments to the government. We are awaiting official details of the results with the list of the winners, to understand and figure out the way ahead hereon."
The Department of Telecommunications (DoT) has yet to release full details of the auction results. Authorities are bound by a Supreme Court order to disclose results only after it has delivered its judgment on an appeal filed by several operators that have called the auction rules into question.
The court has previously indicated it will deliver its ruling after the auction had finished -- until it does so, information about the auction winners cannot be made public.
"We participated in the recent spectrum auction to ensure continuity of business and service to our customers," said a Vodafone spokeperson in a statement issued today. "We remain committed to providing seamless connectivity and superior communication services to our customers across the country. We will make a further announcement once the DoT announces the results of the auction."
Even so, license winners will need to pay one third of their spectrum fees initially and the rest by 2027.
Although it has yet to be confirmed, parts of the local press are reporting that Reliance Communications has picked up 800MHz spectrum in 10-13 circles (service areas) and that Reliance Jio has failed to procure a pan-India spectrum license in either the 800MHz or 900MHz bands.
Since incumbents like Vodafone and Idea were fighting hard to defend their existing spectrum holdings, they are likely to have spent significant sums to be able to continue offering services to their subscribers. (See An Idea Whose Time Has Come .)
— Gagandeep Kaur, contributing editor, special to Light Reading