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India’s biggest mobile operator says it has no great need for additional spectrum, raising questions over sum government will generate from September’s auction.
Comments made by Bharti Airtel chief executive Gopal Vittal this week suggest that India’s largest mobile operator may not have a huge role to play in the country’s upcoming spectrum auction.
Vittal, who serves as CEO and managing director of the telco’s India and South Asia business, indicated that Bharti Airtel is not in need of a significant amount of additional spectrum at present, according to a Press Trust of India report published by the Times of India.
Bharti’s current spectrum holding puts it in a "very solid position," Vittal said on the operator’s second-quarter results call, the paper reported.
"We need spectrum to fill [a] few gaps here and there," it quoted him as saying. "Broadly, from [a] spectrum perspective, we don’t see [a] great need of spectrum at this point of time."
The auction could raise significantly less than the government hopes, should Bharti prove highly selective in its bidding or even elect not to take part at all.
Based on reserve prices, the government is looking to raise upwards of 5.44 trillion rupees (€71 billion) from the auction of frequencies in the 700 MHz, 800 MHz, 1800 MHz, 2.1 GHz, 2.3 GHz and 2.5 GHz bands, which is likely to take place in September.
However, even prior to Vittal’s comments, analysts were doubtful that bidding will reach that kind of level.
Earlier this month Crisil Research predicted that selective bidding from the operators will lead to unsold spectrum in many bands, including 700 MHz, and a final total of around INR1 trillion for government coffers.
The firm also predicted that India’s big three mobile operators – Bharti Airtel, Vodafone and Idea Cellular – will contribute 55%-60% of the sum between them.
Bharti was the second biggest spender in India’s 2015 auction, accounting for 27% of the INR1.099 trillion raised.
However, at the time it complained about the structure of the sale and the scarcity of available spectrum, both of which led to participants tabling what it termed exorbitant bids.
Since then Bharti has closed the acquisition of 2.3-GHz spectrum from smaller rival Aircel in six of India’s telecoms circles, having agreed to pay INR35 billion (€462 million) for the airwaves in eight circles in April; it has yet to update the market on the other two circles. And two months ago Bharti Airtel completed the INR44.28 billion (€588.92 million) acquisition of 1800-MHz spectrum in six circles from Videocon.
All of the above seems to point to minimal participation in the upcoming auction. If that proves to be the case, Crisil’s INR1 trillion projection could prove ambitious.
