An auction of spectrum in the 900MHz and 1.8GHz bands has commenced in India, with the government hoping to raise as much as $1.8 billion.
The long-awaited auction is taking place despite a last minute effort by Vodafone, Bharti Airtel and Idea Cellular to delay the re-auction of spectrum for which they already hold licences in several large cities, including Mumbai and New Delhi.
The Supreme Court rejected the petition from the three largest operators (which also included a request to extend the existing licences beyond November), meaning they now have to rebid for the licences.
The companies claimed their contracts should allow them to reacquire the spectrum without competition, according to Financial Times.
There are eight participants in the auction, including Reliance Jio Infocomm, which is currently engaged in building a 4G network. Telenor India is also taking part.
Analysts believe the current auction is unlikely to see the kind of bidding war seen with 3G spectrum.
However, Suresh Mahadevan, head telecoms analyst in Asia for UBS, told Financial Times that Bharti and Vodafone will be extremely keen to secure spectrum in the major cities, “where this really is do or die”, while Reliance “is something of a wild card”.
The auction is the third attempt by the Indian government to reallocate the 2G spectrum in the past 18 months. The attempts in November 2012 and March 2013 failed as the prices for the spectrum was set too high to attract enough bidders.
In November 2013, the Indian government put a reserve price on 900 MHz spectrum 25 per cent higher than that recommended by the Telecom Regulatory Authority of India (TRAI). In addition, the Empowered Group of Ministers, a government panel, set a price for 1.8 GHz spectrum that was 15 per cent higher than that backed by the TRAI.
India has seen erratic regulation and intense price competition in the recent past.
The most dramatic development came when the Supreme Court cancelled more than 100 2G spectrum licences in 2012, on the grounds that they were improperly allocated in 2008. The move led to a number of foreign players exiting the market.