The Future for Telcos looks Robust with Significant Investment on Spectrum

By siliconindia | Wednesday, 06 July 2016, 04:58 Hrs

BENGALURU: High data consumption, particularly in metros has lead to increased network congestion, which accounts for almost 60 percent of the data traffic. Telcos have been scavenging for ways to augment network capacity and spectrum holdings in order to maintain their competitive position. Realizing the need for the same, Indian Telcos have announced their plan to invest Rs 1 Lakh Crore for buying spectrum across bands in the September auction window, reports from credit agency Crisil Ltd.

"Unlike previous auctions, operators do not face business continuity issues this time, but we expect reasonably healthy participation as incumbents will ramp up their 3G and 4G spectrum holdings ahead of Reliance Jio's entry," says, Ajay Srinivasan, Research Director, Crisil.

This move will reshape the distributions and the three major carriers; Bharti AirtelBSE -1.94 percent, Vodafone India and Idea CellularBSE -0.94 percent might account to a significant 55-60 percent of the total expenditure. Touted as the ‘biggest spectrum sale’ by Union Cabinet, airwaves over 2200 MHz will be auctioned by government across 4G bands (700 MHz, 1800 MHz, 2300 MHz and 2500 MHz bands) and the 2100 MHz 3G band.

The inflated rates of 4G airwaves in the much craved 700 MHz band will discourage most Telcos from bidding for the same as these firms prefer less expensive airwaves in 1800 MHz band to bridge 4G gaps. Study suggests that these auctions are usually able to sell only 10 percent of the spectrum corresponding to the 700 MHz band. The move will help to enforce competence and bridgethe 4G gaps by providing less expensive 1800 MHz band. Telcos however look positive to buy nearly half of the spectrum auctioned in the 1800 MHz and 2100 MHz bands, while for 800 MHz and 900 MHz bands, telcos are expected to purchase the entire quantum.

"Large telcos are cumulatively likely to spend Rs 1.2 trillion over the course of the current and next fiscals on spectrum payouts as well as network augmentation," predicts Srinivasan.