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Spetrum and Auctions

Seven operators to bid in India’s biggest ever auction

Vodafone and Idea urgently need more 4G spectrum, and to limit expansion of disruptive new entrant Reliance Jio

Seven operators are to bid in India’s upcoming mega-auction of spectrum the Department of Telecommunications (DoT) says.

Newcomer Reliance Jio will take part, which could enhance its ability to inflict Free Mobile-style disruption on the already overcrowded Indian mobile market with its new LTE-only network. Six better established operators will also bid, and will hope to limit Jio’s further expansion. They are market leader Bharti Airtel, plus Vodafone, Idea Cellular, Tata Teleservices, and both Reliance Communications and Aircel (which are to merge). Vodafone and Idea, in particular, need to boost their 4G spectrum holdings as they have inferior coverage compared to Bharti and Jio.

The main absentees are state-owned BSNL, which cited “financial and other reasons” for staying out; and Telenor’s Indian unit. The Norwegian telco has been a vocal critic of the high reserve prices placed on the 700 MHz frequencies by regulator TRAI, which are hard to justify in a country where operators have such low ARPU and margins.

In July, Telenor said that “the proposed spectrum prices do not give an acceptable level of return”. It also confirmed that it was evaluating its options in terms of its future in India as consolidation sets in. Reliance Communications (RCOM) and Aircel announced the merger of their mobile businesses last week; Reliance has also acquired SSTL while Bharti Airtel has made a number of smaller purchases.

The government has a target to raise at least 5.44 trillion rupees ($83bn) from the country’s largest ever auction; though some analysts expect the results to be far lower. Analysts at Crisil Research are projecting takings of INR1 trillion.

The auction is scheduled to start on October 1. The spectrum on offer comprises 2,200 MHz across the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2.1 GHz, 2.3 GHz and 2.5 GHz bands. Licences will be valid for 20 years and roll-out obligations vary according to the band.

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