Following the very poor response, financially and
technically, all the blame go to TRAI who recommended Rs 18,000 cr for pan
India spectrum. The spectrum auction for 1800MHz later priced for Rs 14000 cr
for pan India 5MHz spectrum which is too high for operators who had shelled out
money for 3G and 4G spectrum and in high debt. Operators’ bodies – COAI and
AUSPI repeatedly told that this price will replicate in negative growth of the
sector but regulatory bodies TRAI and DoT did not took them in ears.
The tepid response tells that CAG did miscalculation of Rs
1.76 lakh cr loss on 2008 spectrum sale. They messed up because they took 3G
auction as basic, and 3G auction went fierece as operators thought 3G growth
story would be same great as 2G were.
Top circles like
Delhi, Mumbai did not get a single bidder
Among 5 bidders, only Telewings/Telenor and Videocon do not
have spectrum there. These metro circles have more than 100% teledensity, while
circles like Karnataka, Rajasthan are near to saturated yet to pricey. This
spectrum can be used for 2G (= mainly voice) - so no big revenue earner from
it. The market is transformed into something that new operators will not go for
a rock bottom tariff to get customers in these circles.
Incumbents went on
buying more spectrum
Airtel won 1.25MHz spectrum in Assam only for just Rs
8.67crore. Idea Cellular bidded to own back spectrum in 7 circles (Kolkata,
Maharastra, West Bengal, Assam, Jammu & Kashmir, North East and Orissa) it
lost licenses. Idea acquired 5 MHz (4 x 1.25MHz) in all 6 circles except in WB
It won 5 slots, and in Bihar it won single slot of 1.25MHz. Thus Idea continues
its pan India operation.
Vodafone won spectrum in 14 circles - 2.5 MHz in Haryana,
Madhya Pradesh, UP West, Assam, Bihar, Jammu Kashmir, Orissa, North East and
1.25MHz in Maharastra, Kerala, Punjab, UP East, Himachal Pradesh.
At a point this move by the incumbents seem to be on the
right way as India's telecom sector is often having no clarity on spectrum
regulation. As often these three players act as an unit, they can share this
spectrum within legal limit.
Videocon wins 6
circles + operation is in full swing in Punjab
Though many thought Videocon Is backed by Reliance
Industries and it will go for pan India 2G spectrum, the company did not follow
the trend. Videocon wins back 5MHz spectrum in 6 circles - . Videocon’s license
in Punjab was not cancelled as it has brand sharing agreement (dual technology)
with Quadrant which offers CDMA mobile services under Ping brand. So Videocon
will operate in 7 circles in future.
Videocon head Mr. Dhoot said that in future the company will
try to enter more circles as govt. of India conducts the spectrum auction.
Telewings or Telenor
India wins 6 circles
Telenor, currently operating in 9 circles after scaled down
from 13 circles, wins back 6 circles with 5MHz of 1800MHz spectrum on each
circle. Out of these 9 circles – Telenor miss Mumbai, Kolkata and West Bengal
where it has quite good subscriber base.
Telenor wins Maharastra circle, and it could buy Loop Mobile
who has operations in Mumbai. Buying Loop Mobile means Telenor will have a
solid network with a subscriber base, but will have to pay for the spectrum.
Post-auction Telenor/Uninor did not send any message to its
customers in Kolkata, WB or Mumbai requesting porting out. I don’t told what is
boiling inside the company.
Though 1800 MHz spectrum is technology-agonostic Telenor
clears the fact that they will not deploy 3G/4G services over this band.
Telenor will keep offering affordable voice services. But Telenor is giving a
miss to enterprise customers – no postpaid, no 3G, no Blackberry. Like MTS,
Telenor must open up for all options even if there is few takers.
No new pan-India
player
Currently pan India players include Bharti Airtel, Vodafone
India, Reliance Communications (GSM and CDMA), Aircel and Idea Cellular. Tata
Tele following withdrawl from CDMA spectrum auction will stop operations in
North East, Assam and Jammu Kashmir.
So no new pan India player which means ‘one country one
circle’ will be delayed and to offer pan India coverage this new players have
to make deal with pan India players.
That means another profit making situation for incumbent players.
Chances of cancelling
this auction and conducting a new one
This auction with highly-cricitized prices got lukewarm
response. New players - Etisalat DB, STel, Loop Telecom did not bid and exited
market. Sistema Shyam also did not, as they are waiting to resolve the issue
legally by curative petition. Tata Tele planned to bid for CDMA spectrum later
drew up. Anticipated but Reliance Industries also did not participate. Aircel,
Reliance Communications and Loop Mobile stayed away.
With poor response from operators the auction gained just Rs
9407.64cr, compared to Govt.'s expectation to generate Rs 40,000 cr. As this
amount is to be adjusted by the payment done in 2008 and remaining amount to be
paid in installments - i.e. there is much lower payment from the telcos. ET
report suggested as the operators have to pay 1/3rd of total payment right now,
and the payment to be adjusted with 2008 payment - Telewings, Videocon and Idea
don't have to pay in next couple of years. Not only that those who exited
market, Etisalat, Batelco may ask for refund of the payment done in 2008.
The Supreme Court of India also asked why all spectrum (by
the cancellation of licenses given away in 2008) was not put in the auction. However
re-conduct of this auction will be great for neither GoI nor the telecom sector.
But unsold circles will go for another auction before 31st March, 2013, as informed by Union Telecom Minister Kapil Sibal.
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