New Delhi: Telecom analysts are predicting a tepid response to the biggest-ever spectrum auction, particularly in the prized 700 Mhz band, despite government’s latest move to ease certain bidding norms to attract bidders.
The government hopes to raise as much as Rs 5.63 lakh crore from auction of mobile phone airwaves, slated to begin from September 29. Yesterday, the telecom department issued bid document or Notice Inviting Applications (NIA) for auction of spectrum in 7 bands - 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands.
It spelt out better terms including reduced equity lock-in period, quicker allocation of spectrum to successful bidders and easier roll out obligations, but tightened the upfront payment clause for spectrum above 1GHz (that is, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 Mhz) to 50 per cent as against 33 per cent stipulated in the previous auctions. “We do not expect meaningful participation in 700MHz spectrum band due to high reserve price and relatively nascent 4G ecosystem,” Edelweiss said in its latest report.
Edelweiss further said the decision on 50 per cent upfront payment for spectrum above 1GHz would “further burden the balance sheets of the companies which are looking to acquire spectrum, especially in the 1800MHz band”. Edelweiss expects Vodafone and Idea to add more spectrum in the 1800MHz band to enhance 4G spectrum holdings.
Deutsche Bank’s report said it does not expect any sale of spectrum in the 700MHz due to its high price. “Additionally, the new revenue share framework incentivises purchase of cheaper spectrum, hence we believe companies will purchase larger quantities of spectrum in the 2100 or 2300 MHz bands rather than allocate monies to 700Mhz,” Deutsche Bank said.
