Will Spectrum Auction Justify Modi's Digital India Plan?

By siliconindia | Monday, 09 March 2015, 13:16 Hrs

BANGALORE: The ongoing spectrum auctions, which has crossed over 60,000 crore on the very first day, are likely to intensify competition among major telecom players, leading to higher tariffs, and will also increase the gap between top operators and smaller ones.

The government had raked in 62,162 crore from the last spectrum auction held in February 2014. Surprisingly, the high bids not at all support Modi’s Digital India plan.

A total of 380.75 MHz of spectrum in three bands, the premium 900 MHz band, 1,800 MHz and 800 MHz, was put on sale besides 5 MHz in the 2,100 MHz band across 17 out of 22 telecom areas in the country.

According to an Asian brokerage firm CLSA in a report said that at the end of day one, the spectrum in 900 MHz is already 32 per cent above the reserve price and there was excess demand in 5 out of 17 circles.

“However, despite limited blocks on offer, 2100 MHz and 1800 MHz bands saw 1-2 per cent price increase with no bids in select key circles. 800 MHz saw limited interest with price increase in only 2 circles,” it said.

CLSA added that, in a surprise, large data markets of Delhi, Mumbai, Karnataka and Andhra Pradesh saw no price increase in 2100MHz band, despite only one block of available spectrum.

A total of 380.75 MHz of spectrum in three bands, the premium 900 MHz band, 1,800 MHz and 800 MHz has been put on sale besides 5 MHz in the 2,100 MHz band across 17 out of 22 telecom areas in the country.

Incumbent Bharti Airtel and Vodafone are locked in a battle with upstart carrier Reliance Jio of billionaire Mukesh Ambani to protect their spectrum they need to carry voice and data in the world's second-biggest smartphone market. A total of eight bidders are in fray for the spectrum.