Indian auction sees just 40% of available spectrum sold

After five days of bidding, India’s largest ever spectrum auction wrapped having brought in a total of $9.8 billion despite 60% of the available frequencies going unsold.

A total of 2300MHz of spectrum was put on the block, with the Department of Telecom (DoT) expecting this vast amount to bring in as much as INR5.6 trillion ($83 billion); however, of the available amount, only 965MHz was snapped up.

High reserve prices for premium bands proved to be a deterrent, with the typically sought-after 700MHz and 900MHz bands attracting no bids. The lack of interest in these frequencies will rattle the country’s government, which had predicted a haul of INR4 trillion ($59 billion) for the 700MHz band alone.

With the reserve price for 700MHz spectrum set at INR11.5 billion per MHz, companies would have faced a minimum spend of INR57.5 billion for a 5MHz block. The government was advised by operators and the GSMA to lower the reserve price but declined; it is therefore perhaps unsurprising that the spectrum attracted no bidders.

The 1.8GHz and 2.3GHz 4G bands proved the most popular among operators, particularly in the service areas that cover the country’s major cities. While all of the available 2.3GHz airwaves were acquired, only 75% of the 1.8GHz spectrum, 60% of the 2.5GHz band, 34% of the 800MHz band and 20% of the 2.1GHz band were sold.

COAI (Cellular Operators Association of India) director general Rajan Mathews stated that the spectrum could be auctioned in around two years if the government and DoT were willing to reduce the reserve price.

Vodafone was unsurprisingly the biggest spender, dropping INR203 billion ($3 billion) to bolster its 4G footprint. The firm now holds 4G spectrum in 17 service areas, although its coverage is not as extensive as market leader Bharti Airtel or newcomer Reliance Jio, both of which are able to provide 4G coverage in all 22 service areas.

Vodafone obtained 2×82.6MHz of FDD and 200MHz of TDD spectrum in the 1.8, 2.1 and 2.5GHz bands. The group recently undertook an equity injection of more than $7 billion into its Indian unit to slash its debt by over 50% in order to ready it for the impending auction.

Airtel meanwhile spent INR142 billion to purchase airwaves in three bands - 1.8GHz, 2.1GHz and 2.3GHz – with Jio also acquiring spectrum in three bands – 800MHz, 1.8GHz and 2.3GHz - for INR137 billion. The newcomer disclosed that in these respective bands it had obtained 15MHz across four regions, 39.6MHz across eight regions, and 160MHz across 16 regions, paying 6.5% over the reserve prices.

Meanwhile, number three Idea Cellular acquired 349MHz of spectrum across four bands so as to achieve nationwide mobile broadband coverage. This included 74.6MHz in the 1.8GHz and 2.1GHz bands and 200MHz in the 2.3GHz and 2.5GHz bands, costing a total of INR128 billion. This acquisition boosts Idea’s total spectrum holding to 890MHz, taking it past its spectrum coverage requirements according to chairman Kumar Mangalam Birla.