The auction of 2G and 3G spectrum began from yesterday. Apart from major players, Bharti Airtel and Vodafone, Reliance Jio Infocomm will be a key player to watch.
The government is hopeful of collecting Rs. 80,000 crores to Rs. 100,000 crores this year. The amount will vary depending on how much these telecom companies are willing to spend to hold on their present spectrum in the vital 900 Mhz band. Companies will also keep an eye on 3G spectrum in 2,100 Mhz band.
The bands of 2,100 Mhz is up on sale with a reserve price of Rs. 3,705 crores per Mhz. The two bands that may witness the highest bids are 800 Mhz with reserve price of Rs. 3,646 crores per Mhz and 900 Mhz with reserve price of Rs. 3,980 crores. Besides, the government has fixed the reserve price at Rs. 2,191 crores for 1,800 Mhz band.
Seven companies are participating in the auction to make a bid for 2G and 3G spectrum. Idea Cellular has the highest number of 9 circles at stake that contributes around73% of its revenue. Vodafone and Reliance Communications have 7 circles while Bharti Airtel is risking its 6 circles. Tata Teleservices and Uninor may either bid for few 3G frequencies or try and broaden the range of their 2G spectrum.
Reliance Jio, a strong player
Reliance Jio has shown these major players that they may face a stiff competition from it. It gave the highest amount of deposit amounting to be as high as Rs. 4,500 crores. This clearly shows the company’s aim of bidding for many spectrum circles.
As other companies will try to retain their spectrum, a fierce competition is expected. If they fail to do this, then they will have to shift their customers to another band, which will be a costly affair. With Reliance Jio eyeing on the significant 900 Mhz band, other companies may have a tough time. The new broadband player may bid for extra voice and data service spectrum. Besides, it may also seek the vital 800 Mhzband from the existing companies. Small spectrum is available in 2,100 Mhz band, too. It has 5 Mhz while 15 Mhz will be released when defense decides to. Due to this, the bidding in this band will be intense, too.
Idea may lose the most, if it does not bid much. If Reliance Jio makes aggressive bids in Idea’s existing 900 Mhz band then Idea will have to give up on some of its circles in this band and resort to other spectrum in other bands to stabilize its business.
Last year too, Reliance Jio had made high bids in 1,800 Mhz band and won 14 circles. In 2010, it acquired 4G spectrum in 2,300 Mhz band. The company already has sufficient spectrum to roll out its 4G and voice services. It will still focus on vital bands to boost its services.
Being strong financially, the company may spoil the business and game plan of other bidding companies. It has very low risks and may buy wide amount of spectrum.This will make the auction extremely interesting as predicting the game plans and winners will be difficult.