Will India exceed Rs 11,343 crore budgeted amount from spectrum sale?

Tomorrow was the last date of submitting applications and Indian government should be happy as eight operators have submitted their applications.

GSM operators like Bharti Airtel, Vodafone and Idea have applied to protect their turf and it is also a do or die situation for them as their licenses are expiring in 2014. Dual technology operators like Tata Teleservices and Reliance Communications are participating for getting additional spectrum in 1800 MHz band.

Reliance Jio will look at opening its account in other spectrum band say 900 MHz and 1800 MHz. Aircel is participating for increasing its valuation and Telewings, the Indian unit of Telenor is looking at increasing its presence from a six circle operation, as it aspires to have presence in around 10-12 circles.

Keeping in view the ground reality, TeleAnalysis estimates that the government will definitely exceed the budgeted amount of Rs 11,343 crore from the spectrum sale starting 3rd February, 2014.

It is estimated that the government will earn a minimum of Rs 3,190 crore from 900 MHz and Rs 12,007 crore from 1800 MHz. So, in toto the government will get around Rs 15,197 crore from spectrum auction in FY 2013-14 which is a good sign for the government as well as industry. This is also heartening as government was not successful in its earlier attempt.

So, let’s look at the reason why government will exceed their target?

First, the number of operators are too many and we should expect for an aggressive bidding both for 900 MHz as well as 1800 MHz. Eight operators participating in an auction is a good sign for the government and it is also a do or die situation for GSM operators as they would like to get the most lucrative Delhi and Mumbai circle at any cost.

Second, 900 MHz spectrum auction is limited to three circles of Delhi, Mumbai and Kolkata. In Delhi and Mumbai, the spectrum put up for auction is 16 MHz whereas in Kolkata it is 14 MHz. So, with limited spectrum in metros for 900 MHz, one will see aggressive bidding in 900 MHz spectrum band.

Third, the 1800 MHz spectrum auction has lot of capacities but will see an aggressive fight between all the operators. The losers of Delhi and Mumbai will at least try to get 1800 MHz and so will get it at any cost. In other circles, GSM operators have to get 1800 MHz spectrum band for continuity of their operations so this puts 1800 MHz at premium.

Dual technology operators will definitely try to increase their spectrum so that they can launch data operations at a later stage on 1800 MHz so one has to see what is the quantum of spectrum that they plan to buy and this will make the fight interesting between old and new GSM operators.

Fourth, Reliance Jio will be the most important factor and one has to carefully watch its moves. Reliance Jio’s participation will definitely act as a catalyst for increasing government’s revenue from the recent spectrum sale and its participation in 900 MHz and 1800 MHz will increase the bidding amount of the respective circle. According to industry experts, Reliance Jio will be aggressive both on 900 MHz and 1800 MHz as they have the cash as well as the compulsion for increased coverage.

So, in days to come we will see an interesting fight and whoever wins in this round will be the winner in data.



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