India’s largest three mobile operators have committed to spending a total of INR895 billion ($14.3 billion) – 85 per cent of the record INR1.1 trillion ($17.6 billion) the government will generate from the auction of four spectrum bands.
Bharti Airtel, Vodafone India and Idea Cellular control 58 per cent of the country’s 941 million mobile connections, according to GSMA Intelligence.
Idea emerged as the biggest spender – paying about INR303 billion for 48MHz, with renewals making up the majority of its spending. Airtel was second, shelling out a total cost of INR291 billion for 112MHz and Vodafone India was third, paying INR260 billion for 78.4MHz.
Reliance Jio Infocomm was a distant fourth (INR101 billion) and RCom was fifth (INR43 billion). Jio was expected to bid aggressively but accounted for just 9 per cent of the total auction price and 18 per cent of spectrum offered, predominantly in 800MHz and 1.8GHz bands.
The 900MHz band across 17 service areas sold at a 111 per cent premium over the reserve price, and although it accounted for just 40 per cent of the spectrum sold, it represented 66 per cent of the total cost, Moody’s said.
The 800MHz frequencies went for a 64 per cent premium, while the 1.8GHz band closed 15.6 per cent higher than the reserve price. The 2.1GHz allocations were just 5 per cent above the base price.
The three largest mobile operators were able to renew their 900MHz spectrum in all regions, or telecoms “circles”, where their licences were up for renewal.
Airtel not only managed to renew all of its expiring spectrum, it expanded its holding by 52 per cent, adding spectrum in seven new regions. It now has a pan-India 3G footprint (with the exception of Kerala) using 900MHz and 2.1GHz.
Moody’s noted that 40 per cent of Airtel’s spending in the auction was used to expand its spectrum, with the remainder for renewals. The country’s largest operator will also be able to offer pan-India 4G services using a combination of FD-LTE technology in the 1.8MHz band and TD-LTE in the 2.3GHz band.
But RCom was only able to hold onto its 900MHz spectrum in two of the seven regions where its licences are expiring. The company, however, will be able to compensate for the shortfall as it purchased 26.5MHz in the 800MHz band (only 5MHz was expiring). It now has 800MHz and 1.8GHz holdings in the five circles where it will lose 900MHz spectrum.
Nidhi Dhruv, a Moody’s analyst, believes the company’s management has steered away from the expensive 900MHz band where premiums ranged from 80 per cent to 200 per cent. “This demonstrates financial discipline. RCom has future-proofed its spectrum by increasing its holdings of the 800MHz band by over five times as this spectrum is better suited for offering LTE services.”
He noted that RCom also has existing “intra-circle” roaming agreements with other operators in these circles.
Moody’s expects RCom and Jio to collaborate over the longer term to leverage off each other’s networks to broaden their offerings.
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