That the ongoing spectrum auction, which completed 12 days on Tuesday, was going to be a fight to the finish among the country’s top four operators for retaining their 900 MHz band of spectrum was well known. However, in the last few days the auction has been continuing not because the fight for the 900 MHz band is getting bloodier by the day; it is continuing and expected to go on for a couple of days more because the fight has now shifted to the 800 MHz band.
The top four operators — Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications — and new player Reliance Jio are locked in a fight for 800 MHz spectrum across circles where this is available in contiguous blocks of either 5 MHz or 3.75 MHz. That’s because a contiguous block of either 5 MHz or even 3.75 MHz of 800 MHz band is good enough to provide data services using LTE technology. Simply put, wherever a contiguous block of 5 MHz or 3.75 MHz of 800 MHz band is available, its propagation characteristic is similar to, say, 4.4/5 MHz of 900 MHz.
Analysts tracking the auction maintain that till the price of 800 MHz in such circles does not reach the price levels of 900 MHz, the auction would continue. Aggressive bidding for 800 MHz is on in mainly five circles: Andhra Pradesh, Assam, Madhya Pradesh, Northeast and Maharashtra.
There’s another reason for the fight now shifting to the 800 MHz band. In the circles where contiguous blocks are not available, the demand is being driven by the incumbent players for some small quantum of spectrum lost by them in the 900 MHz in the circles where their licences are up for renewal.
Analysts also said that some demand is possible as operators in future would want to free up one block of 5 MHz in the 900 MHz band for 3G.
As far as the 900 MHz band is concerned, the fight seems to be over barring in one circle — West Bengal — where 4.4. MHz renewal spectrum is available. On day 11 (March 16), 900 MHz saw price action only in the West Bengal circle, similar to day 10. West Bengal is a unique case with only 4.4 MHz of renewal spectrum and 4.4 MHz also being the minimum bid quantum for renewal licences and for any new player.
Barring this circle, operators have mostly been able to regain their 900 MHz spectrum in circles where it was up for renewal, barring one or two in the region of 5 MHz to 9 MHz. The premium over the reserve price in the 900 MHz has been limping since Day 7 when the premium was at 76.8%, increasing to 78.5% at the end of Day 11. In comparison, the price increase for 800 MHz spectrum on Day 7 stood at 35.7%, reaching to 61.1% on Day 11.
In the 2100 MHz band there’s not much of action as much seems to have got settled. The price increase here is flattish and there have been no bids in circles like Andhra Pradesh, Mumbai, and Delhi. The reason could be twofold: One, the operators have bid only in circles where they do not have 3G spectrum and two, since this is a simultaneous auction for four bands, they have exhausted their points and do not have enough to bid for this band.
In the 1800 MHz band the action has been tepid, along expected lines since there’s not much spectrum here and if one takes into account contiguous block of 5 MHz, it is even less. Nevertheless, there has been some action in smaller circles wherever it is possible for the incumbent operators to use it as a back-up for renewable 900 MHz spectrum.