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India Gears Up For Spectrum Auction Next Month; Tepid Response Expected

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India Gears Up For Spectrum Auction Next Month; Tepid Response Expected

The Indian government estimates spectrum worth INR2.75 trillion ($41 billion) will be sold in the country’s forthcoming auction, about half of the INR5.6 trillion reserve price. This is deemed to be the largest spectrum auction in the world.

Indian authorities have come under attack for deciding high minimum base price for the spectrum in various frequency bands. Indian telcos have been requested the Department of Telecommunications (DoT) to postpone the spectrum auction.

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The Government is offering spectrum in seven bands of 700Mhz, 800Mhz, 900Mhz, 1800Mhz, 2100Mhz, 2300Mhz and 2500Mhz with a reserve price of INR 5.6 trillion. Spectrum in the coveted 700Mhz is the most expensive, which might be one of the key reasons to drive telcos away from auction. Telcos are likely to use the forthcoming auction to selectively procure spectrum to fill gaps in their 3G and 4G coverage, rather than hoard spectrum.

The Indian telecom industry is under huge debt and this auction is likely to further push the industry in debt. Bharti Airtel, Vodafone India, Idea Cellular, Reliance Communications, Reliance Jio Infocomm and Aircel are likely to participate in the auction.

Since the telcos are not under any pressure to procure more spectrum the response to this auction is likely to be muted. India’s largest telco, Bharti Airtel has recently acquired Videocon and Aircel’s spectrum and claims to have largest 4G spectrum in the country. Reliance Jio already has spectrum in 800Mhz, 1800Mhz besides pan-India 2300Mhz frequency band. Idea Cellular and Reliance Communications also have sufficient spectrum. Telenor has already made it clear that it will not be participating in these auctions.

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