The wait is finally over as the big day has arrived. The largest spectrum auction in the history of Indian telecom industry is set to commence today as 800MHz, 900MHz, 1800MHz and 2100MHz bands go up for sale. The government will be auctioning 380.75 MHz of spectrum in 800, 900 and 1800MHz bands and 85MHz in 2100MHz band.

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A total of 8 telecom operators will be bidding for spectrum out of which Aircel and Tata Docomo are not allowed to bid for spectrum in bands in which they do not already own spectrum in a particular circle. Also state owned telecom operators MTNL and BSNL along with pure play CDMA operator MTS and regional player Videocon are also not participating in the auction. But the major risk involved in this auction is for the incumbent players Airtel, Vodafone, Idea cellular and Reliance communications whose 900MHz spectrum is completing its 20 year licence period and are up for renewal. If these operators are not able to win back their 900MHz spectrum they will have to move to the higher frequency 1800MHz spectrum which has lower penetration inside buildings and thus requires greater number of towers to offer the same coverage which again adds to the capital expenditure and may cause a temporary disruption of services during the transition.

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What is at stake?

In 2015-16 Bharti Airtel has  licences in Andhra Pradesh, Himachal Pradesh, North East, Punjab, Karnataka and Rajasthan coming up for renewal. These 6 circles comprise of 34% of the gross revenue of Airtel. Luckily Airtel has sufficient fall back spectrum in 1800MHz band in all these circles and can migrate its operations to the higher frequency band if it fails to win back its 900MHz spectrum. Vodafone has licences in Kerala, UP East, Rajasthan, Gujarat, Maharashtra, Tamil Nadu and Haryana coming up for renewal. These 7 circles comprise of 48% of the gross revenue of Vodfone. Currently it lacks sufficient fall back 1800MHz spectrum in Rajasthan, Gujarat and Maharashtra circles and will have to retain its 900MHz spectrum in these circles or shut down operations if it fails to do so. Idea cellular has licences in Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra, UP West, Andhra Pradesh, Karnataka and Punjab coming up for renewal. These 9 circles comprise of 73% of the gross revenue of Idea. Currently it lacks sufficient fall back 1800MHz spectrum in Gujarat and UP West circles and will have to aggressively defend its 900MHz spectrum in these circles or shut down operations there. Reliance communications has licences in Assam, Bihar, Himachal Pradesh, Madhya Pradesh, North East, Orissa and West Bengal coming up for renewal. These 7 circles comprise of just 15% of the gross revenue of Reliance. Currently it lacks fall back spectrum in 1800MHz band in any of these 7 circles and is in a do or die situation and faces a huge risk competing with AVoId and RJio for retaining its 900MHz spectrum.