Spectrum auction 2016 aftermath- Who paid what to stay relevant where?

So the largest ever spectrum auction which had been the talk of the town concluded on Thursday, with the government being assured Rs.65,789 crore in revenue. Of the 2,355 megahertz (MHz) of spectrum put up for sale across seven bands, only 965 MHz or around 40% got sold. The much awaited auction saw just 31 rounds of bidding and concluded on the fifth day. We've updated our Pan India spectrum holding chart with the results of the October 2016 spectrum auction, which you can refer to for details.

So from Rcom losing its 2G spectrum in Gujarat circle to Tata coughing up a fortune to retain its own in Mumbai, we've witnessed it all. The purpose of this article is to outline which operator spent how much money in which circle to stay relevant in the ever increasing competition in the telecom sector. Let us first consider each band that was put up for sale individually.

700 (Band 28) and 900 MHz (Band 8) remained unsold :

The 700 MHz spectrum which the government made free after cable TV digitization, found no takers on account of its high base price. There was also no bidding for spectrum in the 900 Mhz band as the incumbents had already gathered enough spectrum in this band in the previous two auctions. The 700 MHz band itself was expected to go for a total of Rs 4 lakh crore had the entire amount that was put for sale been sold at floor price.

850 Mhz ( Band 5 ) :

In 850MHz band, 15MHz got sold out of the total 73.75 MHz put up for auction. Reliance Jio was the only operator which won airwaves in this band in four circles. Given below is the chart of the spectrum won in 850 MHz band along with the winning bid value.

1800 Mhz ( Band 3 ) :

In 1800 MHz frequency band, 175 MHz out of the total 221 MHz put up for sale was sold. Mainly operators bought spectrum in this band to deploy 4G networks. Airtel bought the spectrum in 8 circles, Vodafone in 11 circles, Idea Cellular in 12 circles while new entrant Jio picked the airwaves in 8 circles. While Tata ended up spending a fortune in a bargain to retain its 2G operations in Mumbai, Maharashtra and Andhra Pradesh circles. Given below is the chart of the spectrum won in 1800 MHz band along with the winning bid value.

2100 Mhz ( Band 1 ) :

In the 2100MHz band, 85 MHz out of 365 MHz put up for sale was sold. Airtel won spectrum in 5 circles including Kerala circle making it the first operator to achieve pan India 3G spectrum footprint. Vodafone picked the airwaves in 7 circles including 10 Mhz of spectrum in Tamilnadu, hinting that it might use it for FD-LTE. Third largest operator Idea Cellular won similar airwaves in 4 circles. Given below is the chart of the spectrum won in 2100 MHz band along with the winning bid value.

2300 Mhz ( Band 40 ) :

In 2300MHz band the entire 320 MHz that had been put on the block got sold. Pureplay 4G operator Jio added 10 Mhz of spectrum in 16 circles to augment its capacity and bring LTE Advanced networks in future. Market leader Airtel also bagged 10 Mhz in 13 circles. Birla owned Idea too added spectrum in their three key leadership markets of Kerala, Madhya Pradesh and Maharashtra. Given below is the chart of the spectrum won in 2300 MHz band along with the winning bid value.

2500 MHz ( Band 41 ) :

In the 2500MHz band, 370 MHz out of 600MHz that had been put up for sale was sold. Idea Cellular picked airwaves in 16 circles while Vodafone bought the spectrum in 15 circles. Both operators plan to expand 4G LTE network in the coming months across the country. Given below is the chart of the spectrum won in 2500 MHz band along with the winning bid value.

So, what are the final damages to the operators' balance sheets post the auction?

•  Vodafone acquired 365.2 Mhz of spectrum in the 1800 MHz, 2100 MHz and 2500 Mhz bands for a total worth of Rs. 20,280 crore.
• Airtel acquired 173.8 Mhz of spectrum across the 1800 MHz, 2100 MHz and 2300 MHz bands for a total amount of Rs. 14,244 crore.
• Jio acquired 269.2 MHz of spectrum across the 850 MHz, 1800 MHz and the 2300 MHz band, paying a total value of Rs. 13,672 crore.
• Idea acquired 349.2 MHz of spectrum in the 1800 MHz, 2100 MHz, 2300 MHz and 2500 Mhz bands for a total of Rs. 12,798 crore.
• Tata acquired 24.8 MHz of spectrum in the 1800 MHz band for a total cost of Rs. 4,619 crore.
• Reliance acquired 10 MHz of spectrum in the 1800 MHz band for a total expenditure of Rs. 65 crore.
• Aircel acquired 3.6 MHz of spectrum in the 1800 MHz band for a total price of  Rs. 112 crore.

Note: For calculating the total quantum of spectrum purchased by each operator, the uplink and downlink portions of paired spectrum have been added while the unpaired spectrum has been considered as is.

TT perspective:Although the government expected a huge revenue from the auction, due to high base price and immature device ecosystem, operators skipped 700 MHz band and filled in the gaps in their data spectrum portfolio by acquiring cheaper airwaves in 2300 and 2500 Mhz bands. While 3G is dying and operators are betting big on 4G thanks to Jio's arrival in the market, we expect Idea and Vodafone to soon expand their 4G data network footprint.On the other hand, Airtel which now has Pan India 3G and 4G spectrum will focus on dual technology to meet data demand across the metro and rural markets. Jio currently seems to be best placed with the right mix of low frequency 850 MHz spectrum for coverage and high frequency 1800 and 2300 MHz airwaves for capacity. Also the cash rich backing of Reliance industries will ensure that the operator is able to invest on network infrastructure and expansion despite the auction expenditure.