Idea Cellular was the biggest spender in the recently-concluded Indian spectrum auction, it emerged this week, accounting for 28% of the 1.099 trillion (€16 billion) raised by the government via the sale of frequencies in the 800 MHz, 900 MHz, 1800 MHz and 2.1 GHz bands.
India’s third largest mobile operator by subscribers – it had 152.9 million customers as of the end of January, according to the Telecom Regulatory Authority of India (TRAI) – pledged more than 300 billion rupees (€4.4 billion) to secure spectrum in all bands but the 800 MHz.
The telco issued a statement in which it put its total spend at INR301 billion, but figures provided in a comprehensive report from the Department of Telecommunications (DoT) came in slightly higher at INR303 billion. There were also slight discrepancies with other operators’ figures too, although these were insufficient to change the shape of the outcome.
"The company will be availing of the deferred payment facility offered by the government," Idea said.
It was not the only one to make reference to the sizeable sums operators will have to part with as a result of the auction.
"The auction design and the scarcity of spectrum have resulted in exorbitant bids to secure the spectrum, particularly in renewal circles, where huge investments have already been made on the assurance of a continuity of business enshrined in the licenses issued by the DoT," said Gopal Vittal, Bharti Airtel’s CEO for India and South Asia.
"We hope that in future auctions, the government will make available adequate spectrum by securing it from agencies and operators who are underutilising this vital resource," he added.
Bharti’s auction bill comes in only slightly lower than Idea’s. The market leader bid a total of INR291 billion for spectrum in the top three bands, more than half of the sum going on the renewal of existing licences. Bharti said it spent INR176 billion renewing its 900 MHz spectrum in six circles and a further INR115 billion on new 900 MHz, 1800 MHz and 2.1 GHz frequencies.
Similarly, Vodafone renewed spectrum licences in six 900 MHz circles that were due to expire in December this year, as well as adding new spectrum in the sam
e three bands as Bharti. Its total investment reached INR259.6 billion according to the DoT, or INR258.1 billion according to its own estimates.
"With the new and existing spectrum, Vodafone India will be able to expand its 3G service over its own network from 9 circles to 16 circles," the telco said in a statement.
The aforementioned three operators were expected to spend the most, due to the licence renewal issue. Reliance Communications also had licences to protect, but spent far less than its rivals.
As the auction progressed there was much talk of Reliance Jio Infocomm, which plans to launch full mobile services later this year, and the extent to which it would dominate proceedings. In the end the newcomer walked away with a relatively modest bill, shelling out just over INR100 billion for 800 MHz and 1800 MHz frequencies.
"With this investment, in addition to [its existing] pan-India 2.3 GHz spectrum, Reliance Jio Infocomm has spectrum in either 800 MHz or 1800 MHz or both in 20 out of [a] total 22 circles in the country," the operator said. "This combined spectrum footprint across frequency bands provides significant network capacity and deep coverage."
Tata Teleservices, which operates as Tata DoCoMo, also picked up spectrum in the 800 MHz and 1800 MHz bands, while Aircel acquired 1800 MHz airwaves in just one circle: Tamil Nadu.
The only player to come away from the auction with nothing was Telenor-owned Uninor, an outcome that has given rise to further rumours about a possible merger with Tata Teleservices.
The operators are reportedly ironing out the final details of a merger, and earlier this month the Business Standard quoted unnamed sources as saying that an announcement will come once the government has finalised its M&A policy, something that is due to take place upon conclusion of the auction.
With Tata committing INR78.5 billion through the auction, despite the fact that it is widely believed to be looking for an exit from the telecoms space, and Uninor spending nothing, despite having the backing of a major European player, some sort of deal does seem to be on the cards.
