Prashant Singhal, global telecom leader, EY, said the spectrum auction that started in India on Saturday — October 1, 2016 — is on the expected lines.
The most important point was that telecom network operators did not bid for the costly 700 MHZ spectrum that can be used for 4G services.
Interest from mobile operators for the 1800 MHz spectrum in telecom circles, where there is some shortage, was also anticipated.
“We should see some intensity over the next day or so and closure of the auction within the next week,” said Prashant Singhal, global telecom leader, EY.
The day one response from mobile operators indicates that the India government will not be able to sell substantial chunk of the 2,354.55 MHz spectrum across seven bands during the 2016 spectrum auction.
Based on the reserve price of spectrum, the Indian government can mobilize Rs 5.66 lakh crore or nearly $85 billion by selling 2,354.55 MHz in seven bands.
The following information gives a clear picture about where telecom network operators are going to make investment in terms of the spectrum and network roll out.
Spectrum band, circle and provisional winning price per block at end of round 5 (In INR crore)
Uttar Pradesh (East) 273.75
Andhra Pradesh 48.60
Himachal Pradesh 3.20
Jammu & Kashmir 2.60
Madhya Pradesh 16.60
North East 2.20
Uttar Pradesh (East) 23.00
Uttar Pradesh (West) 19.48
West Bengal 9.20
Jammu & Kashmir 55.00
Tamil Nadu 1720.00
Uttar Pradesh (East) 550.00
Andhra Pradesh 680.00
Himachal Pradesh 10.00
Madhya Pradesh 81.60
North East 10.00
Tamil Nadu 1320.00
Day 1 of spectrum auction
India’s biggest telecom spectrum auction, that started on Saturday, received commitments of Rs 53,000 crore approximately from telecom operators after five rounds of bidding while there were no takers for 700 MHz and 900 MHz bands, according to data by the Department of Telecommunications.
The majority of activities were seen in the 1800 MHz band. The maximum bids of 75 were received for Mumbai circle with a provisional winning amount of Rs 69.6 crore per block with an excess of 50 bids, while the second highest bids – 69 – were received for Assam circle with a provisional winning amount of Rs.8 crore per block. However, this circle also saw 30 less bids.
The 700 MHz band, meant predominantly for 4G (LTE) services which will support broadband data, as well as Internet Protocol telephony such as voice over LTE network — measures that can bring major cost benefits to customers — went without bids.
In the Delhi circle, the reserve price for 700 MHz is pegged at Rs 1,595 crore per MHz — which is the highest — and for pan-India, it is Rs 11,485 crore per MHz.
The 2,300-plus MHz of airwaves on the block for telecom operators are 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, 470.75 MHz was on offer, which was set to fetch the exchequer $17 billion during the tenure of licence.
Spectrum auction background
Bharti Airtel, Vodafone India, Reliance Jio Infocomm, Reliance Communications, Idea Cellular, Aircel and Tata Teleservices are looking for adding more spectrum to ensure better connectivity for 900 million mobile subscribers in India.
Based on the earnest money deposit, which is roughly 10 percent of what a telecom operator can bid for, 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.