The make-or-break auctions for the country’s top-four mobile firms will begin on Wednesday. While the government is looking to make R80,000 crore to R1 lakh crore from the bids, operators Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications will slug it out among themselves to retain their precious 900-Mhz spectrum in the circles which goes for bids. Mukesh Ambani’s Reliance Jio, which is yet to launch its services, is also partcipating in the auctions. Apart from the 900 Mhz band, the other bands up for auction are 800, 1800 and 2100 Mhz bands.
Though the auctions begins from Wednesday there’s a cloud over its outcome as the Supreme Court has asked the government to declare the results only after its nod. The next hearing on the matter is on March 26 so the government cannot announce the results of the auctions before it and the operators cannot claim equity based on its results.
Six circles of Bharti Airtel, seven of Vodafone, nine of Idea Cellular, and seven circles of Reliance Communications (RCom) – 20 year licence period – are expiring in 2015-16. As such it becomes mandatory for these telcos to bid for 900 MHz band of spectrum to continue offering mobile and other telecom services.
Telcos like Bharti Airtel, Vodafone and Idea Cellular, which hold a major chunk of 900 MHz band of 2G spectrum – one of the most efficient band – would have to ensure that they win back these airwaves or else they would have to either switch to other bands of spectrum or close down their operation in a particular telecom circle where these airwaves are expiring.
In case telecom companies want to continue their operations with other bands of spectrum, other than 900 MHz band, they will have to develop a new infrastructure, machinery and have to create an entire new set-up besides developing a completely new ecosystem in tune with the new band, which is very expensive.
The winners in the 900 Mhz and the 800 Mhz bands will need to pay 25% of the winning amounts within 10 days of the auction close, while 33% of the winning bid price will be the upfront payment for spectrum in the 1800 Mhz band. The rest would need to be paid in 10 equal instalments after a two-year moratorium.