March 2015 Auction: How much money Indian operators will have to shell out?

DOT (Department of Telecom) is all set to conduct the next big bang auction of 900MHz, 1800Mhz, 800MHz, and 2100Mhz. Today we bring you in-depth analysis of the spectrum put for auction in each circle and how much operators would spent to buy back their expiring spectrum.
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Spectrum and reserve price put for auction

Operators with 900MHz spectrum expiring
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900MHz spectrum expiring in 2015-2016

The above list provides an overview of operators whose 900MHz spectrum is put for auction due to their license expiring in 2015-16. We have also calculated minimum amount based on reserve they must spend to buy back at least 5MHz(to continue service in 900MHz) of the spectrum. This amount could go up by over 50% based on demand and amount of spectrum bought by operator.

Airtel

Airtel needs to renew its expiring license in 5 circles. Airtel had made a smart move of bagging 8+MHz of 1800 Mhz spectrum in the last auction for these circles. So Airtel can relax even if they could not win back 900MHz spectrum as they can still continue service with sufficient 1800MHz it holds.

Minimum amount to buy back at least 5MHz of 900MHz spectrum in 5 circles: AP(Rs 2295 cr) + KA(Rs 1850 cr) + PJ(Rs 755 cr) + RJ(Rs 985 cr) + HP(Rs 135 cr) = Rs 6020 cr

Idea

Idea will be under lot of pressure as its license is expiring in 9 circles, which happen to generate 75% of its revenue. In the last auction, Idea have managed to won 5+MHz of 1800Mhz band in Andhra Pradesh, Maharastra, Haryana, Madhya Pradesh, Punjab, and Kerala. For Gujarat and Utter Pradesh West, it will be a life and death game as it doesn’t currently hold sufficient spectrum in 1800MHz to continue service in case unable to win back its spectrum in 900MHz.

Minimum amount to buy back at least 5MHz of 900MHz spectrum in 9 circles: AP(Rs 2295 cr) + GJ(Rs 2120 cr) + KA(Rs 1850 cr) + MH(Rs 2625 cr) + KL(Rs 840 cr) + HY(Rs 380 cr) + MP(Rs 875 cr) + PJ(Rs 755 cr) +  UP West(Rs 850)= Rs 12590 cr

Vodafone

Vodafone stands to lose spectrum in 6 circles. Vodafone had secured additional spectrum in 1800MHz band in Gujarat, Haryana, Kerala, Uttar Pradesh East. For Rajasthan circle, Vodafone need to buy back its spectrum or buy at least 5MHz spectrum in 1800MHz band to continue its service.

Minimum amount to buy back at least 5MHz of 900MHz spectrum in 6 circles: GJ(Rs 2120 cr) + RJ(Rs 985 cr) + MH(Rs 2625 cr) + KL(Rs 840 cr) + HY(Rs 380 cr) + UP East(Rs 1140)= Rs 8090 cr

Reliance Communication

This auction will be crucial for RCOM as it need to buy back its 900MHz spectrum in 7 circles. Due to heavy debt, RCOM didn’t buy any additional spectrum in 1800MHz during last auctions. RCOM service in these circles may come to end if it is unsuccessful in winning back its 900MHz spectrum or buy at least 5MHz in 1800MHz.

Minimum amount to buy back at least 5MHz of 900MHz spectrum in 7 circles: MP(Rs 875 cr) + WB(Rs 555 cr) + AS(Rs 370 cr) + BH(Rs 740 cr) + HP(Rs 135 cr) + NE(Rs 145 cr) + OD(Rs 335) = Rs 3155 cr

2100MHz 3G spectrum

DOT will put 5MHz of 2100MHz 3G spectrum for sale. The reserve price is yet to be finalized while Telecom Commission suggests Rs 3,705 crores per MHz overruling TRAI’s recommendation of 2,720 crores per MHz.

Airtel, Idea, and Vodafone will bag most of the 2100MHz 3G spectrum to expand its 3G coverage. While it is uncertain whether smaller operators like Aircel, Docomo or Uninor may bid for expensive 2100MHz. Deep pocket player like Reliance Jio could also bag 3G spectrum in few circles, but it is still uncertain whether they would deviate from current 4G only strategy.

800MHz CDMA spectrum

MTS will be the potential operator interested in buying 800MHz spectrum for CDMA. But they have already announced that reserve price are too high. While dual technology operators like RCOM and DOCOM don’t have much interest in CDMA. 4G operators like Reliance Jio could bag 800MHz and deploy LTE over it, but it is uncertain at the moment.

1800MHz 2G/LTE spectrum

Unsold 1800MHz from the last auction in addition to expiring 1800MHz will be put for sale. 5+MHz of 1800MHz spectrum is only available in Kolkata, Haryana, Himachal Pradesh, North East, Odisha, Rajasthan and Tamil Nadu. Operators whose 900MHz spectrum is expiring may also buy additional 1800MHz to compliment for the loss of 900MHz. Reliance Jio may also bid to increase its 1800MHz footprint across the country.

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20 Comments on "March 2015 Auction: How much money Indian operators will have to shell out?"

 

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Piyush Jain
February 24, 2015 4:49 pm 4:49 PM

Nice info !

MUKESH MATHUR
February 19, 2015 6:49 pm 6:49 PM

Dear Tharun G,
Hi, Good work indeed ! the way the auction is laid out for the upcoming fierce battle with huge ED’s already blocked upfront, who do you think in the end, shall shell out the monies. Will it be Promoters/Bankers/telecom employees (by cost cuts and lesser manpower) or is it going to be the end customer. Is it going to be good for the Telecom Sector ?

Kirit patel
February 6, 2015 11:13 pm 11:13 PM

Hi Tharun what are you thinking about which operator can win 2100 MHz auction in Gujarat.

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