high tele-density and are difficult markets for new players. A 30% reduction in the reserve price would not be attractive for any new player. For incumbents, participating does not matter much because they already have spectrum. The government needs to lower the entry barrier for new players to get in these circles which it has once again failed to do,” said a telecom analyst.
If these four circles once again do not elicit any bids, it would create a problem for the government since it needs auction-determined prices to levy a one-time charge on incumbent operators for spectrum held beyond 4.4 MHz. Industry players said that the government would be left with no choice but to lower the price once again.
Analysts said that the price of 900 MHz spectrum is also high and it remains to be seen how the two affected players – Bharti Airtel and Vodafone – bid. The government has decided that operators having 900 MHz can retain 2.5 MHz spectrum after matching the bid price and can bid for another 2.5 MHz. However, analysts said that since their networks in Delhi and Mumbai are capacity-based rather than coverage-based, they won't lose much by either surrendering the 900 MHz or not bidding for it at all. Their strategy may be shaped depending on how their competitors, who currently do not have 900 MHz spectrum, plan their strategy. “If competitors plan to bid, then the incumbent holder would not like to lose the 900 MHz spectrum considering its usage for data services in future,” said an analyst.