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January 16, 2014

India to Auction 443 MHz of Mobile Spectrum

The Indian telecommunications ministry plans to start an auction for frequencies in the 900 MHz and 1800 MHz frequency bands beginning on Feb. 3, 2014. 

Some 403 Mhz will be offered in the 1800 Mhz band, while 46 Mhz will be made available in the 900 Mhz band. Licenses have a 20-year lifetime.

That might seem a completely innocuous development. After all, regulators auction spectrum with some frequency, these days.

The backstory is that two earlier auctions had to be postponed because the government’s reserve prices were deemed excessive. Mobile operators declined to bid in the last two rounds held in November 2012 and March 2013, citing very high reserve prices and low spectrum availability.

Indeed, the latest auction also was delayed a bit because potential bidders opposed the government plan to levy spectrum usage charges (SUC) between three percent and eight percent of revenue.

Bharti Airtel Ltd. and Vodafone Group, India’s two largest operators, are among the leading contenders to win much of the spectrum, though Reliance Jio Infocomm also is bidding. That might be noteworthy because Reliance Jio Infocomm had won 4G spectrum recently, and is paying a recurring fee of just one percent of revenues.

If Reliance Jio Infocomm is willing to bid for even more spectrum, at significantly higher fees, it indicates Reliance anticipates higher growth, and needs more spectrums.

Idea Cellular also has applied to bid in the spectrum auction, observers say. Reliance is the third-largest mobile service provider, while Idea Cellular is the fourth largest.

image via shutterstock 

The government hopes to raise at least $1.8 billion from the sale of spectrum rights.

Smaller rival Telenor India has also said it will also participate in the bid battle for new airwaves.




Edited by Ryan Sartor


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