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India’s Auction Sells Just 40% Of the Spectrum; Garners $9.8Bn

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India’s Auction Sells Just 40% Of the Spectrum; Garners $9.8Bn

India’s largest-ever spectrum auction ended after just five days with the government garnering only INR657.8 billion ($9.8 billion), much less than the INR5.6 trillion ($83.9 billion) it had anticipated. Only 40% of the available spectrum was sold, with telcos not showing zero any interest in the coveted 700MHz and 900MHz frequency bands.

Authorities had been trying to sell 2,354MHz of spectrum in the frequency bands of 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz and 2500MHz. Seven service providers, Bharti Airtel, Vodafone India , Idea Cellular, Tata Teleservices, Reliance Jio, Reliance Communications and Aircel Ltd, participated in the auction.

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Bharti Airtel, India’s largest service provider, eventually acquired 173.8MHz spectrum in the 1800MHz, 2100MHz and 2300MHz bands for a total of INR142 billion ($2.12 billion), according to a statement issued by the company. It now claims to own 3G and 4G spectrum in all of India’s circles (service areas).

Vodafone India spent INR200 billion ($2.9 billion) for new licenses, and greenfield operator, Reliance Jio, acquired 269.2MHz in the 800MHz, 1800MHz and 2100MHz bands for INR136 billion ($2.03 billion).

“We have expanded our spectrum footprint thereby significantly enhancing capacity of our all-IP data strong network and ensuring world class services for all Indians,” said Mukesh Ambani, the chairman of Reliance Industries Ltd. (RIL) , RJio’s parent company. “RJio is committed to taking India to global digital leadership by bringing the power of data to all Indians.”

Ideaspent INR127.9 billion ($1.9 billion) to acquire 349.2MHz (in the 800MHz, 2100MHz, 2300MHz and 2500MHz bands). Tata Teleservices, on the other hand, spent INR40 billion ($590 million) on licenses in Mumbai, where its existing concessions will soon expire, according to media reports. Aircel and RCom spent the remaining $400 million of the total $9.8bn spent in the auction.

The service providers ignored the 700MHz frequency band because of high base price. Authorities had priced 700MHz spectrum at INR114.9 billion ($1.7 billion) per MHz on a pan-India basis, which had led to huge protests from the service providers.

“Three to four national operators with robust 700MHz-based broadband networks have the potential to accelerate India’s progress to the top league of digitally enabled nations,” said a press statement issued by Airtel. “Therefore, the pricing of the 700MHz band spectrum needs to be addressed on priority for the nation to benefit from the digital dividend arising out of this high quality spectrum band.”

Experts believe that the high reserve prices are responsible for the rather muted response to the auction.

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