Spectrum auction could leave telcos shaken and stirred
While Reliance Jio could enter with a bang, others face a battle for survival in some circles
Reliance Jio has put in Rs 45 billion as earnest money deposit (EMD) for the spectrum auction, the highest among telecom operators. This spices up a contest in which Vodafone, Idea and Reliance Communications face a battle for survival in some circles.
Bharti Airtel has put Rs 43.36 billion, Idea Cellular Rs 40 billion, Vodafone Rs 37 billion, and loss-making Tata Teleservices Rs 15 billion, higher than the Reliance Communications (RCom), Uninor and Aircel
A higher EMD allows an operator to place bids across more circles and spectrum bands, thus indicating the carrier's intent to pick up a greater quantity of airwaves.
"This has now become too serious a game," a top official at a leading telcom operator said. "One can't be naive to think Jio will only bid to push up prices. They could make a serious play in 800 MHz and even in 900 MHz for that matter, which is not what many people expect."
He added that Jio could upgrade its network to suit 900 MHz and even 2100 MHz if need be at an additional cost of about $1 billion (Rs 62 billion or 6200 crore), which "isn't much considering the amount that they are spending overall, their deep pockets and the high stakes involved."
The EMD, which ranges from 16% to 25% of the reserve price, has to be deposited in the form of a bank guarantee by operators applying to participate. The EMD earns potential bidders points, which are then used to make bids across spectrum bands and service areas.
Any bidder who puts in money in excess of Rs 40 billion is expected to bid "aggressively for 900 MHz and even 2100 MHz spectrum," a top government official said.
The telecom department (DoT) is auctioning spectrum in 2G bands of 800 MHz (which can be used for 4G LTE), 900 MHz and 1800 MHz, and 3G band of 2100 MHz.
The sale, slated to start on March 4, will pit the biggest business houses in India - Reliance Industries headed by Mukesh Ambani, Reliance Group led by his brother Anil Ambani, the Aditya Birla Group, the Bharti Group, chaired by Sunil Mittal, as well as the Tata Group - against each other, and against foreign giants Vodafone and Uninor (owned by Telenor).
Based on story in Economic Times