 "Telcos put money on 900-MHz band")
For incumbent telecom operators, history is repeating itself. As in the previous round in February last year, this time, too, these operators are putting most of their money in trying to retain their 900-MHz spectrum. This band is crucial for their survival in many circles.
On the second day of auctions the telcos placed Rs 59,124 crore (based on assumption that every spectrum/block got sold) of bids for 900-MHz spectrum in 17 circles, an increase of 47.1 per cent from the total base price. On the first day, telcos had placed Rs 52,117 crore worth of bids for 900-MHz spectrum, 30 per cent higher than the total base price of Rs 40,233 crore.
For incumbent players Idea Cellular, Vodafone, Reliance Communications and, to an extent, Bharti, it is a do-or-die battle.
A total of 79.58 per cent of the bids were for buying 900-MHz spectrum; the rest was for the 800-, 1,800- and 2,100-MHz bands.
Government sources said at the end of the second day, total bids worth of Rs 65,000 crore had been received for all bands, adding there was more spectrum to be sold after 11 rounds of bidding. On the first day, bids worth Rs 60,000 crore were received.
Experts say due to the peculiar design of the auction, some spectrum, especially in the 900-MHz band, is not being bid for though prices are rising. If all the spectrum had been bid for, the overall bid amount would be about Rs 75,000 crore.
In the 1,800-MHz band, bids have been received for Rs 3,210 crore, while in 2,100-MHz band the amount is about Rs 8,200 crore and in the 800-MHz band Rs 5,131 crore.
In February last year, overall bids for 900-MHz spectrum in the circles of Delhi, Mumbai and Kolkata were 30 per cent more on the first day, at Rs 16,800 crore.
On the second day of auctions the telcos placed Rs 59,124 crore (based on assumption that every spectrum/block got sold) of bids for 900-MHz spectrum in 17 circles, an increase of 47.1 per cent from the total base price. On the first day, telcos had placed Rs 52,117 crore worth of bids for 900-MHz spectrum, 30 per cent higher than the total base price of Rs 40,233 crore.
For incumbent players Idea Cellular, Vodafone, Reliance Communications and, to an extent, Bharti, it is a do-or-die battle.
A total of 79.58 per cent of the bids were for buying 900-MHz spectrum; the rest was for the 800-, 1,800- and 2,100-MHz bands.
Government sources said at the end of the second day, total bids worth of Rs 65,000 crore had been received for all bands, adding there was more spectrum to be sold after 11 rounds of bidding. On the first day, bids worth Rs 60,000 crore were received.
Experts say due to the peculiar design of the auction, some spectrum, especially in the 900-MHz band, is not being bid for though prices are rising. If all the spectrum had been bid for, the overall bid amount would be about Rs 75,000 crore.
In the 1,800-MHz band, bids have been received for Rs 3,210 crore, while in 2,100-MHz band the amount is about Rs 8,200 crore and in the 800-MHz band Rs 5,131 crore.
In February last year, overall bids for 900-MHz spectrum in the circles of Delhi, Mumbai and Kolkata were 30 per cent more on the first day, at Rs 16,800 crore.
According to a note from Standard & Poor’s, competition among major telecom players in the ongoing spectrum auction is likely to intensify, leading to higher rates. Besides, it would also increase the gap between top operators and smaller ones, the agency said.
“We believe the largest three operators — Bharti Airtel, Vodafone and Idea Cellular — have manageable leverage and improving market shares, which should enable them to withstand the impact of the auctions outgo," said credit analyst Abhishek Dangra.
For circles such as Gujarat, Maharashtra and Uttar Pradesh (West), which are must-wins for Vodafone, Idea and Reliance Communications, prices soared on the second day. These zones are crucial because the operators have no back-up spectrum in the 1,800-MHz band in case they fail to retain their 900-MHz spectrum.
For instance, Gujarat, crucial for both Vodafone and Idea, saw 900-MHz prices rising 41 per cent. Vodafone, which has to retain its 900-MHz spectrum in Maharashtra, has seen the price rising 31 per cent already. For Uttar Pradesh (west), where Idea must retain its spectrum to continue business, the prices rose by a steep 61 per cent on the first day, though there was no increase on the second day.
The bidding has been intense for most circles for which Reliance Communications has to win back its 900-MHz spectrum. On the second day, for Himachal Pradesh and Odisha, there was a price rise of 75.4 per cent and 79.3 per cent, respectively; for Bihar, it was 81.7 per cent and Madhya Pradesh 33.4 per cent, compared to their respective base prices for these circles.
Surprisingly, there hasn’t been any notable activity in the 800-MHz band, except in the Madhya Pradesh circle, the price for which has risen marginally over the base price. In the 2,100-MHz band, too, the price increase has been limited to Assam (13.7 per cent), Kerala (six per cent), Kolkata (six per cent), Madhya Pradesh (five per cent), Northeast (13.6 per cent), Odisha (9.2 per cent), Rajasthan (17 per cent) and Uttar Pradesh East (five per cent). There was no additional demand for 2,100-MHz spectrum in the Delhi, Gujarat and Karnataka circles. Similarly, it was a quiet affair in the 1,800-MHz band, with no increase in the base price in any circle except Andhra Pradesh (12.5 per cent increase over the reserve price).