Reliance Industries may bid for 2G spectrum

Telecom Lead India: Reliance Industries is likely to bid in the upcoming 2G spectrum auction.

Addition of 2G spectrum is vital for Reliance Industries to become an integrated communication player in Indian telecom market.

Entry of the Mukesh-Ambani run Reliance Industries into the telecom market will give tough competition to established mobile operators such as Airtel, Vodafone, Idea Cellular, Reliance Communications, Tata Teleservices, etc.

At present, RIL-owned Infotel Broadband has BWA spectrum to launch TD-LTE services across the country.

Infotel Broadband’s participation in the auction can lead to a significant rise in spectrum prices, analysts said, adding that this can impact existing players such as Bharti Airtel and Vodafone, Economic Times reported.

“High 2G auction price will have an impact on every other payout and also set a higher benchmark for future airwave auctions. Entry of an aggressive player in the 2G auctions could limit spectrum in key circles like Delhi and Mumbai and will impact larger players more,” said Prashant Singhal, partner at E&Y.

With payouts related to refarming proposal and one-time prospective charge linked to auction-determined prices, any significant increase in spectrum prices will hit both incumbents and new players such as RCOM and Tata Teleservices. Since only 10 MHz of airwaves are being auctioned, RIL’s bid in the auction can limit the quantity of spectrum for other bidders.

“Such a model will allow RIL to have a dual mode – with both a data offering and a back-up of 1,800 MHz network. The company will face some institutional hurdles since it will have to build networks and get clearances for a pan-India network,” said Kunal Bajaj, a telecom analyst.

With third generation services yet to take off in India, analysts say, the world’s second-largest telecom market is yet to have a large appetite for a pure play data offering, making a case for bundling of data with voice services.

“Clearly, there is still time before data takes off in a big way in India and voice telephony will continue to be the bread and butter for telcos,” said telecom analyst Mahesh Uppal.

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