Indian government setting low targets for upcoming spectrum auction

The government of India has revealed it expects to raise around INR2.75 trillion ($41 billion) in the imminent large-scale spectrum auction – around half of the INR5.6 trillion reserve price.

The somewhat pessimistic prediction was made by a Department of Telecommunications (DoT) official on the condition of anonymity.

A few days earlier, the country’s operators asked for the auctions to be delayed by a few days from the current scheduled date of 29th September. As it stands, a mock auction will be held on the 26th-27th September ahead of the actual bidding, and the operators have requested more of a gap between the trial and the auction.

A massive 2,354.55MHz of spectrum in seven bands – 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz — will be made available in the upcoming auction, which is set to be one of the country’s largest ever. India’s last auction, in March 2015, offered 470.75MHz with bids reaching INR1.1 trillion.

The premium 700MHz band is highly sought after and therefore has the highest reserve price; however there are concerns that this could deter operators from bidding for it. Indeed, analysts are expecting operators to cherry-pick frequencies in order to plug any holes in their 3G and 4G coverage, instead of going all out in their bidding.

A quote from Kotak Institutional Equities noted: “The September 2016 auction will be the first in the past three years without material ‘renewal’ spectrum on offer — not a ‘gun on the head’ auction for most operators… To this end, this auction is a critical test of the operators’ rationality; an auction where operators need to guard against getting swayed by competitive spirits and bid with long-term interests in mind; no self-goal, in other words.”

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