Who will and who won’t bid in India’s wireless auction for airwaves on September 29? Live Mint broke down reasons why some of the 12 wireless firms could sit out this year’s auction for bandwidth, one that the news source calls India’s “biggest sale of the spectrum that can reduce buffering on videos and speed up downloads for one billion-plus users in the world’s second-largest smartphone market.”
The 12 wireless carriers in India reportedly carry more than $61 billion in debt, and the government is looking to raise $83 billion at the auction. However, declining revenue due to price wars, debt accrued from last year’s auction and customers using apps with data plans instead of traditional voice plans may lead several carriers to sit out. Live Mint reported that some voice calls in India have plummeted to below a penny a minute, with total debt up 41 percent since 2014.
Chris Lane, an analyst for Sanford C. Bernstein, told Live Mint that he thinks the spectrum auction “is going to be a failure” and that he doesn’t see carriers “bidding like they did in previous years.”
Those who may sit out include Ambani’s Reliance Jio Infocomm Ltd., which is cutting costs after spending approximately Rs. 1.5 trillion on coverage. Live Mint said that Bharti Airtel Ltd. and Idea Cellular Ltd. are two companies who have lowered data charges and are sharing or trading in airwaves. Idea Cellular is “cautious about bidding after responding to Ambani’s challenge by offering as much as 54 percent more data for the same price.” Telenor ASA already went on record saying it will not bid at the auction because “proposed spectrum prices “do not give an acceptable level of return.” However, Vodafone is predicted to be one of the highest bidders, spending as much as Rs. 16,300 crore for spectrum.
While last year’s auction reportedly made $18 billion, India-based Icra told Live Mint that it predicts much less revenue this year, also because the government has set reserve prices too high. The auction, which covers seven bandwidths from 700 MHz to 2,500 MHz, could increase available spectrum by about 55 percent.
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