A total of seven service providers, including Bharti Airtel, Vodafone India and Reliance Jio, have applied to participate in the forthcoming spectrum auction, scheduled to start on October 1. Idea Cellular, Reliance Communications, Aircel and Tata Teleservices are the other telcos who would be participating in the auction, as per the list revealed by India’s Department of Telecommunications.
RCom and Aircel have already signed a merger agreement, which is likely to close by 2017. Indian-arm of Norwegian telco, Telenor has decided not to participate in the auction. The company had earlier indicated that the high reserve price was preventing it from bidding in the auctions. There were also reports of the company being acquisition talks with Vodafone some time back. Telenor is struggling in the country and is operating in only six circles.
The auction will witness the sale of spectrum in frequency bands of 700Mhz, 800Mhz, 900Mhz, 1800Mhz, 2100Mhz, 2300Mhz and 2500Mhz. The coveted 700Mhz spectrum band is being auctioned for the first time in the country. The Government of India looks to raise INR5.6 billion ($83bn) through the auction but high reserve price can be prohibitive.
The country’s largest service provider, Bharti Airtel looks to be in a comfortable position where spectrum is concerned. However, Vodafone India and Idea Cellular are likely to bid aggressively since they lack 4G spectrum in all 22 circles (service areas) in the country.
Vodafone is planning to spend $3bn in its India operations to compete in the auctions and also to defend its turf against Reliance Jio. Recently, Jio has launched 4G services in the country. The company announced that it would be offering free voice to its subscribers. Since Indian telcos derive most of their revenues from voice, they would need to protect their subscriber base.