There’s been confirmation that India’s next 4G spectrum auction is to go ahead; the start date is 1 March.
As we mentioned earlier this week, the terms for the auction were cleared in December 2020. The Department of Telecommunications' (DoT) notice inviting applications indicated that it planned to sell 2,250 MHz of airwaves across seven 4G bands. The government is putting on sale 660 MHz in the 700 MHz band, 230 MHz in the 800 MHz band, 81.4 MHz in the 900 MHz band, 313.6 MHz in the 1800 MHz band, 175 MHz in the 2100 MHz band, 560 MHz in the 2300 MHz band and 230 MHz in the 2500 MHz band. The permits will be valid for 20 years.
The spectrum auction, India’s first in over four years, is offering airwaves with a base price estimated to be some $53.3 billion. The question now is how the big three operators – Reliance Jio, Bharti Airtel and Vodafone Idea (also known as Vi) – will respond.
Successful bidders will have to pay 25-50 per cent of the amount upfront, depending on the band, with the balance due in up to 16 annual instalments after a moratorium of two years.
Despite what may seem a relatively generous timescale, according to India’s Economic Times a muted response is expected.
As Reliance Jio needs to renew some expiring spectrum permits, it is expected to be the big spender in the auction, but it’s not clear that Bharti Airtel and Vi will feel the additional debt is worth it, especially as they both have backup airwaves in most service areas and any new spending could making tariff rises more likely. They are nevertheless expected to bid for at least some of the available spectrum.
Spectrum has failed to attract bids in the past and bands like 700 MHz may see no buyers at all, according to some analysts. However, the Telecom Regulatory Authority of India (TRAI) has stuck to the spectrum prices it has set, even though some in the industry feel they are too high.
The last date for submission of applications for participation in the auction is 5 February. That should at least give us an initial indication of operators’ willingness to participate.
