Mobile Internet strategy of Indian telecom network operators is expected to reflect in the spectrum auction from Saturday.

Several telecom operators will be trying to buy spectrum for enhancing their 3G and 4G presence to reduce competition from Bharti Airtel and Reliance Jio. The spectrum auction, which will not help the Indian government to meet its target, will prove that both 3G and 4G will survive in India despite global telecoms are starting to invest in 5G.

Seven top telecom operators will be trying to buy 2,354.55 MHz spectrum in seven bands for a price of Rs 5.66 lakh crore or $85 billion during India’s biggest spectrum auction.

Based on the money deposited with the India government — ahead of spectrum auction, the Mukesh Ambani-promoted Reliance Jio Infocomm could be the most aggressive telecom operator during the auction. Since Jio 4G is offering free voice services to all mobile subscribers from 5 September, 2016 rival telecoms will be under pressure to enhance their data presence.

Bharti Airtel, Vodafone India, Reliance Jio Infocomm, Reliance Communications, Idea Cellular, Aircel and Tata Teleservices have furnished total earnest money of Rs 14,653 crore, IANS reported.

Given that earnest money deposit is roughly 10 percent of what a telecom network operator can bid for, experts said the expectations of Rs 5.66 lakh crore ($8.5 billion) was already far-fetched. Earlier, all analyst firms predicted that the spectrum auction will be a muted business for India government which is trying to sell spectrum to meet its financial obligations.

Investment banker Goldman Sachs has predicted that total proceeds from the auction will be around $7 billion — less than half of $16 billion that was fetched in the 2015 auction, and sharply below $85 billion if all spectrum was sold at the reserve price.

Ahead of the auctions, Telecom Secretary J.S. Deepak has said the process would be transparent and the award of airwaves quick. “One new bidding-friendly measure we have adopted this year is that spectrum won will be assigned within 30 days from the date of upfront payment.”

Interest on deferred payment will be 9.3 percent this year against 10 percent in 2015.

Timings of spectrum auction is from 9 a.m. to 7.30 p.m., Monday to Saturday.

Telecom operators can bid for 2,300-plus MHz of airwaves on the block in seven bands — 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. In the previous auction, the India government offered 470.75 MHz, which was set to fetch the exchequer $17 billion during its tenure.

The India government has decided to allot the right to the spectrum won through auction for 20 years.

Telecom operators can make the payment on both upfront and installments payment options. The service providers who win airwaves below 1 GHz bandwidth will have to pay 25 percent upfront, and for those winning above that, the upfront payment will be 50 percent.

For the successful bidder, the lock-in period of equity in the company has been reduced to one year instead of the earlier stipulation of a minimum period of three years or completion of roll out obligation, whichever is later.

The government has fixed the spectrum usage charge at 3 per cent of the adjusted gross revenues of an operator.

Coming to the finer points of the auction, and going by the earnest money deposited, four telecom players appear to be serious — Reliance Industries (Rs 6,500 crore), Vodafone (Rs 2,740 crore), Idea (Rs 2,000 crore) and Airtel (Rs 1,980 crore), IANS reported.

“We expect the auction to be very important for Vodafone and Idea as they have their 3G plus 4G footprint in just nine and seven circles, respectively,” said the Goldman Sachs analysis.

Bharti Airtel and Reliance Jio have much wider network coverage for wireless broadband versus Vodafone and Idea.

“We believe telecom operators will use the upcoming auction to plug 3G/4G gaps. We also expect Bharti and Jio to buy additional 3G and 4G spectrum to augment data capacity on their networks,” said the Goldman Sachs analysis.

The 2016 spectrum auction will give a better picture about the financial strength and mobile Internet strategy of telecom network operators in India.

Baburajan K