Except Telenor, all telecom firms to participate in spectrum auction

Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio will participate in the auction, in which the govt is offering 2,354.55 MHz of spectrum worth Rs5.63 trillion

The spectrum auction starts on 1 October. Graphic: Ahmed Raza Khan/Mint
The spectrum auction starts on 1 October. Graphic: Ahmed Raza Khan/Mint

New Delhi: India’s top telecom companies have signalled their intent to participate in the upcoming spectrum auction, belying concerns that high prices would deter them.

Only Norwegian firm Telenor ASA did not apply to bid in the auction, billed as India’s largest sale of spectrum, before the deadline for telcos to submit their applications lapsed on Wednesday.

Bharti Airtel Ltd, Vodafone India Ltd and Idea Cellular Ltd— India’s biggest telcos—and new entrant Reliance Jio Infocomm Ltd, or Jio, will participate in the auction, in which the government is offering 2,354.55 megahertz (MHz) of spectrum worth Rs5.63 trillion at the reserve price.

Aircel Ltd and Reliance Communications Ltd, which announced their merger on Wednesday, sent in separate applications. Tata Teleservices Ltd will also bid.

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The last date for withdrawal of applications is 22 September for operators. The auction starts on 1 October. The auction should help telcos improve the quality of their data services and voice calls. The proceeds raised from the auction will help the government plug its fiscal deficit.

Reserve prices that both telcos and analysts said were set too high by the government had sparked concern that response to the auction would be muted. Those concerns were allayed by the applications.

The government is putting on sale spectrum bands of 700MHz, 800MHz, 900MHz 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz. The 700MHz band, which is the most expensive and most effective, is likely to generate less interest from telecom service providers.

The base price for the 700 MHz has been fixed at Rs11,485 crore for 1 MHz, making the bidder liable to pay Rs57,425 crore for 5 MHz on a pan-India basis.

The total spectrum on the block also includes 197MHz of additional spectrum in the 1,800MHz band and 37.5MHz in the 800MHz band.

“The government is making available the largest spectrum for sale; it wants to ensure that there remains no scarcity of it in order to ensure better quality of service to the customers,” a government official said on condition of anonymity.

Telenor India’s non-participation in the spectrum auction will not matter, the official said.

“I don’t think Telenor has taken a decision depending on the ease of doing business or otherwise. It must have looked at the competitive environment and the amount of money it is willing to put in and things like that,” the official said.

In March, Telenor said it may exit India unless it is able to secure additional capacity for its networks at a reasonable cost. Announcing its quarterly results in July, the telco said it would likely not participate in the spectrum auction because it wanted to control its capital expenditure.

“We recognize the significant operational and financial improvement delivered by our Indian operation. We have, however, after thorough consideration, decided not to participate in the upcoming spectrum auction, as we believe the proposed spectrum prices do not give an acceptable level of return,” Sigve Brekke, chief executive officer at Telenor Group, said in a statement then.

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