 "Reliance Jio's entry to intensify the battle for spectrum")
Seven other companies, including Reliance Communications (believed to have applied for 1,800-MHz and 900-MHz bands), Bharti Airtel, Vodafone, Idea Cellular, Aircel, Telewings Communications and Tata Teleservices, have also applied to bid in the auctions starting February 3.
With Reliance Jio’s entry as a prospective bidder, the auction is likely to witness aggressive bidding in key circles, especially Delhi and Mumbai, as incumbent operators such as Bharti Airtel and Vodafone are expected to bid aggressively to retain spectrum in the 900-MHz band. Both the companies have 900-MHz spectrum in the Delhi and Kolkata circles; Vodafone and Loop have spectrum in the 900-MHz band in the Mumbai circle.
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Reliance Jio’s move could alter the telecom landscape, especially in 4G segment, as the 900-MHz band is far more spectrum-efficient compared to the 2,300-MHz band the company had bought earlier and on which it is rolling out its 4G, or long-term evolution (LTE), services. This would give it an edge in LTE services in Mumbai, Delhi and Kolkata, where the 900-MHz band is being auctioned.
Reliance Jio’s bid for 1,800-MHz spectrum will ensure its customers aren’t deprived of the more time-tested 2G voice option. While voice-over LTE is permitted, the quality of voice services in the 2,300-MHz band is still being tested. With this, Reliance Jio would be able to straddle different kinds of services — from voice to high-speed data across spectrum.
“The auction will be successful; that is what we believe. We hope to exceed the targeted Rs 11,343-crore revenue from the coming auction for this financial year,”
M F Farooqui, secretary in the department of telecommunications said here on Wednesday. For this financial year, the government’s total revenue target is Rs 40,874 crore from spectrum, including auction amounts, one-time spectrum charges and annual regular licence fees.
The decision of Loop Mobile, which has operations in Mumbai and a licence that ends in November 2014, not to bid for spectrum was a big surprise. By not applying to bid in the auction, the company, which has about three million customers on a 900-MHz spectrum band, stares at closure of its operations in the lucrative circle.
Videocon, which has publicly said it will bid for 900-MHz spectrum in a few circles, including Delhi, didn’t submit an application on Wednesday, the last day to submit applications for the February auction.
Companies that applied in this round have the option to withdraw their applications by January 27.
However, Loop Mobile, in a letter to DoT, has said that it has filed a petition before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) seeking extension of its license and expected to secure the Right of First Refusal for the 900MHz spectrum that it holds in Mumbai.
It added that the petition was filed challenging the “illegal and arbitrary” action of the DoT rejecting the application for an extension of licence of Loop, and it has the right of extension of licence which includes the right to retain the spectrum already allocated to the company. The exercise would cause “grave prejudice” to Loop Mobile by creating third party interest.
“We believe that we have a good case before TDSAT and are likely to succeed in the matter and therefore are not participating in the auction process and we have kept TDSAT and DOT informed about the same. We will take all steps towards renewal of our license beyond November 2014 and thus sustain our continuity of service and assure our stakeholders especially subscribers regarding our ongoing commitment and investment in the business,” said Sandip Basu, MD & CEO, Loop Mobile.
Videocon, which currently has licences in six circles, said that the company was keen to bid for 900MHz spectrum for Delhi and to acquire additional 2Mhz spectrum in Punjab and MP circles on the 1800Mhz band.” After a lot of contemplation, we have decided not to participate in the current spectrum auctions,” said Arvind Bali, CEO and Director, Videocon Telecom.
In the last round of auctions in March 2013, none of the GSM operators had bid for spectrum, citing a high reserve or base price. The Cabinet has fixed the base price for sale of spectrum in the 1800 MHz band for pan-India at Rs 1,765 crore per MHz, about 26% lower than in the March spectrum auction price. For the 900 MHz band, it approved a rate up to 53% lower than the previous auction price. The Government will auction about 403MHz of 2G spectrum in the 1800MHz band and about 45MHz of spectrum in the premium 900MHz band.
While Norway-based Telenor backed Telewings at present operates in six circles, Bharti Airtel, Vodafone, Idea Cellular, Aircel and Tata Teleservices have pan-India operations.