New Delhi: Even as most of the demand for spectrum in auction on the first day remained at reserve prices, the assured amount of $8.4 billion with an immediate upfront payment of $4 billion means that the value of spectrum sold in the current auction is in line with previous spectrum auctions held in India.
“This spectrum auctions is already approaching total bid amount comparable to the previous years, “Credit Suisse said in report issued on 3 October adding, “On day 1, most of the activity has taken place in the ‘4G’ bands of 1800Mhz and 2300Mhz with 65-70% of the spectrum assured of being sold.”
The government in 2015 spectrum sale fetched Rs.1.1 lakh crore where a total of 380.75 Mhz spectrum was put up for sale. In the current auction, 2354.55 Mhz spectrum is being auctioned.
Morgan Stanley issued a report on 2 October forecasting a total potential bid amount in 2016 spectrum auction to be Rs.400 billion with maximum contribution by Vodafone India and Reliance Jio.
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Vodafone is expected to bid in 14 circles in 1800 Mhz band and seven circles in 2100 Mhz band, while Reliance Jio shall bid for five circles in 800 Mhz band and four circles in 1800 Mhz band, analysts at Morgan Stanley said. The report also added, “1800 MHz saw the highest activity, with two to three bidders present across most of the circles; we expect the top three incumbents and RJio to bid to maximize their 4G FDD footprint. 23-2500 MHz has one to two bidders where we think the existing player would try to increase the footprint and RJio could selectively go for second carrier.”
Research analysts at Credit Suisse said that demand in 2500 Mhz band was against expectation and came as a surprise. “Compared to the 2300 Mhz band, the 2500Mhz band has poorer spectrum propagation characteristics and weak device ecosystem”, the report said. Also, the interest shown in the 800 Mhz band is most likely from Reliance Jio Infocomm Ltd, Tata Teleservices and Reliance Communications.
In 2300 MHz band there was excess demand from bidders indicating this band to be important for data in view of operators. “While the operators perceived 2300Mhz band as a poor investment by RJio for last four-five years, now the operator’s view of spectrum in this band appears to have taken a significant shift and is emerging as key spectrum for data”, Credit Suisse said.
Experts expect the bidding intensity to reduce in the coming days, an outcome that will underscore the need for rationality in the pricing of spectrum in India.