Spectrum Pricing Impact Assessment, Indepth AnalysisThe upcoming auction would have long term implications for the sector in terms of deployment of technology (as the auctioned spectrum would be liberalized), competitive intensity, spectrum holding, and pricing power of the operators.

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This auction is likely to be used as market entering strategy by some new operators and strengthening strategy by the incumbent operators.

The high spectrum cost would impact the cost metrics for the operators, who are already burdened by highly leveraged balance sheets. This would exert pressure on the operators to hike the tariffs to recover the additional costs however  the quantum and timing of the same remains uncertain.

Spectrum usage charges:

As recommended by the EGoM, no change has been made to the existing slab rate system for Spectrum Usage Charges, paid annually by the operators as a percentage of their Adjusted Gross revenues.

Impact Assessment :

In each of the 22 telecom circles, sufficient spectrum is available in 1800 MHz band to auction the maximum of 13.75 MHz. In the 800 MHz band, there is no spectrum in the Rajasthan circle, only 2.5 MHz in Andhra Pradesh circle and minimum of 3.75 MHz spectrum is available in four circles. In the remaining 16 circles, there is sufficient spectrum to auction the maximum of 5 MHz in 800 MHz band.

Circle-wise availability of spectrum as of Aug 2012:

Circle-wise availability of spectrum India

As per TRAI recommendations, the total spectrum available in the 800 MHz and 1800 MHz, including the spectrum to be vacated due to cancellation of license, would be 137.5 MHz and 624.6 MHz respectively. However, the spectrum likely to be put up for auction in the 800 MHz and 1800 MHz is likely to be around 97.50 MHz and 302.5 MHz respectively, which is significantly lower than the available spectrum.