Spectrum auction redraws India’s telecom landscape

 

 
New Delhi/Singapore: The spectrum auction that concluded on 13 February not only raised much needed funds for the government, but also set the stage for a redrawing of the competitive landscape in India’s telecom industry.

The 10-day auction of airwaves, India’s fourth, ended with the government attracting bids for Rs.61,126 crore, of which it will garner Rs.18,296 crore in the fiscal year ending 31 March.  

The United Progressive Alliance (UPA) government, which will head into a tough electoral battle this year, was successful in selling almost 80% of the more than 400 units of airwaves in the 1,800MHz band for Rs.37,537 crore, across the country, and all the 46MHz of 900MHz in the three metro markets of Delhi, Mumbai and Kolkata, for Rs.23,589 crore.

Telecom companies will pay 25% and 33% of the bid amount upfront in the 900MHz band and 1,800MHz band, respectively, and the rest in 10 annual instalments after a two-year moratorium

The remaining 3% of the money will come from Telewings Communications Pvt. Ltd, the local unit of Norway’s Telenor ASA, which bagged additional airwaves in its six existing areas of operations and added Assam. Reliance Communications Ltd and Aircel Ltd also won some spectrum.  

The bulk of the money is being paid to acquire 1,800MHz spectrum. Currently, this frequency is being used by telcos to provide 2G services— vanilla voice and basic data services.

The auction behaviour by the three leading incumbents—Bharti, Vodafone and Idea—indicates a strategy shift as they seek to counter Reliance Jio’s upcoming fourth-generation (4G) or Long Term Evolution (LTE) services launch by offering high-end data services on the 1,800MHz frequencies, as well as ensure they have spectrum to continue their business as the existing holdings start expiring.

RANJAY KUMAR,

PGDM 2nd SEM,

SOURCE-: MINT