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, according to The Indian Express.
The estimate came from an official at the Department of Telecommunications (DoT), who requested anonymity.
The downbeat forecast from the DoT comes a few days after the country’s operators requested a delay to the start of the 29 September auction, albeit by just a few days.
The government is offering 2,354.55 MHz of spectrum in seven bands – 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz — with a reserve price of INR5.6 trillion, compared with the country’s last auction of 470.75MHz in March 2015 that saw bids worth INR1.1 trillion.
The frequencies in the 700MHz band is the most highly priced, with concern expressed that operators might be turned off pursuing it by a high reserve price.
Analysts believe that operators will use the forthcoming auction to selectively fill in gaps in their 3G and 4G coverage, rather than compete in a do-or-die manner.
“The September 2016 auction will be the first in the past three years without material ‘renewal’ spectrum on offer — not a ‘gun on the head’ auction for most operators, in our view,” said Kotak Institutional Equities, quoted by Economic Times.
“To this end, this auction is a critical test of the operators’ rationality; an auction where operators need to guard against getting swayed by competitive spirits and bid with long-term interests in mind; no self-goal, in other words,” the firm added.
Separately, the country’s operators want more of a delay between a trial bidding session and the actual auction. The current plan is for a mock auction on 26 and 27 September, with the real thing on 29 September.
But the operators have argued the gap between drill and actual event is too small. The operators said a three or four day gap would be preferable. A pre-bid conference to hear any concerns ahead of the auction was attended last week by representatives from leading operators, including Bharti Airtel, Vodafone India, Idea Cellular, Reliance Communications, Reliance Jio Infocomm and Aircel.