News
Call for bidders will be issued once regulator, cabinet finalise spectrum usage charges, according to local press report.
The Indian cabinet has given the go-ahead to the country’s much-discussed upcoming spectrum auction, which could raise upwards of €70 billion.
The government approved the sale of 2,200 MHz of frequencies across multiple bands, the Economic Times reported this week, noting that the auction will likely take place in August or September.
However, the government has not yet made a decision on the spectrum usage charge that winners will have to pay, nor on the method by which the charge will be calculated.
It has asked the Telecom Regulatory Authority of India (TRAI) for its views on the subject and will make a ruling once it receives feedback from the regulator, the paper explained.
It will publish full auction documents and invite applications to take part once the spectrum usage charge is finalised.
The government has changed the rules on telco investment in a bid to attract newcomers to the sale, the Economic Times said, citing an unnamed source. Specifically, it has reduced the equity lock-in period for those backing telecoms companies to one year from three.
The change comes at a time of upheaval in the Indian mobile market, where consolidation is beginning to take hold.
Customers of small player Videocon have been porting their numbers in recent months after Bharti Airtel acquired the telco’s spectrum in its six operating circles, while a merger announcement from larger operators Reliance Communications and Aircel is expected in the coming weeks. There has also been talk of Telenor exiting the market.
Meanwhile, India’s existing operators are gearing up to face additional competition from Reliance Jio Infocomm, which holds a nationwide licence and is working on the launch of its 4G offering.
Thus, there is little space for a new player to make its mark in India.
There is also the question of cost to consider.
The reserve price for a 5-MHz block of pan-Indian spectrum in the 700 MHz band stands at 574.25 billion rupees (€7.5 billion).
If all the available spectrum in the 700 MHz, 800 MHz, 1800 MHz, 2.1 GHz, 2.3 GHz and 2.5 GHz bands is sold at the reserve price, the government will raise INR5.44 trillion (€71 billion), the newspaper pointed out, five times more than the sum generated via last year’s spectrum auction.
However, industry bodies and analysts are sceptical that all the available spectrum will go. Indeed, the Economic Times notes that some analysts believe only 40%-50% of the frequencies will be taken up.
