The upcoming mega spectrum sale will be crucial for Vodafone and Idea Cellular as they may look at getting pan-India footprint for 4G services with their aggressive bids. Both the telcos are expected to spend roughly $3 billion and $1.5 billion, respectively, to primarily acquire 4G spectrum, according to an Economic Times report.
Both the telcos currently lag behind market leader Bharti Airtel and Reliance Jio Infocomm on the 4G front, and the upcoming auction is their chance to increase their 4G spectrum holdings to better compete with them in the market, which is already seeing consolidation.
India's second-largest telco Vodafone and No. 3 operator Idea Cellular will spend money for increasing their data spectrum holdings in the 1800 MHz and 2100 MHz bands.
According to the report, Vodafone mat even go for the 2300 MHz spectrum in the metro markets."Vodafone with 4G airwaves in only five markets has a desperate need for data spectrum before Jio launches commercially, and could emerge among the biggest spenders in the next auction," an analyst was quoted as saying by the publication.
Idea Cellular has 4G spectrum in 10 circles, compared with pan-India holdings for Bharti Airtel and Reliance Jio Infocomm. According to industry experts, Bharti Airtel is most likely to spend hefty sum to acquire 700 MHz spectrum in high subscriber density markets such as Bihar, Rajasthan, UP-East, UP-West and West Bengal.
The Indian Cabinet earlier this week approved the mega spectrum auction plan, in which airwaves worth Rs 5.66 lakh crore for mobile services will be put up for auction. This auction, which is likely to start from September 1 this year, will see the auction of seven spectrum bands that are 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. It is considered to be the largest auction of spectrum till date due to the quantum of airwaves which will be put up for sale.
Earlier this week, a report by HSBC Global Research said that total proceeds from spectrum auction are unlikely to exceed $10-12 billion (about Rs 80,000 crore). It said that a lot of spectrum might remain unsold in 700, 2300, 2500 MHz bands. It however expected good demand for 1800 MHz, selective demand for 2100 and 700 Mhz bands.
The brokerage further added that the ecosystem for 700 MHz band from an Indian context could take at least 3-4 years to develop.