The Government is set to auction Spectrum offering a golden opportunity to the telecom operators to augment their spectrum. This auction is interesting for two reasons - one, 700 MHz band will be put to auction for the time and two, it will separate the men from the boys. Only serious and long term players will buy spectrum.
The telecom commission has approved the recommendations of the telecom regulatory authority of India (TRAI) on Spectrum pricing thus clearing all decks for the next round of auction.
like all the previous rounds of auction, the industry started crying foul over ‘high’ reserve price of spectrum when the regulator announced reserve price. It seems that the Government is fed up of the cry wolf strategy of the industry. It decided to go ahead with the reserve price set earlier.
Interestingly, when the industry and the big five Consulting firms were telling people how the high prices would lead the telecom service providers on the brink of disaster and how the consumers would suffer, some of the operators were keen to buy spectrum from other operators at a price much higher than the reserve price. Videocon negotiated a good price with Idea Cellular and Bharti Airtel for its spectrum. Finally, Airtel acquired it at a price 65 per cent higher than the reserve price.
Now, there are only two options before the telecom operators - either they win spectrum to become a large player in data services and improve their quality of services, or they merge with other operators. MTS and Aircel have adopted second route and will be merged with RCOM.
At least two players, Reliance Jio and Bharti Airtel are expected to acquire large chunk of spectrum in this auction.
In last one year, Bharti Airtel has behaved like a market leader. It has made its intent clear that it does not want to lose its number one position. It has launched 4G services and has acquired spectrum much higher than its existing competitors. This has clearly segregated it from others.
It will be interesting to watch Idea’s strategy. It is important for Idea to acquire spectrum and become a big player in data services. It is necessary if it wants to maintain its position as number three player.
Though Reliance Jio has not yet started its services, it will also like to acquire more Spectrum. It wants to become the largest broadband operator in the country. This is possible only if its spectrum holding is bigger than that of its competitors.
So, the winners in the spectrum auction will be winners in the race for top positions in the telecom market.
(The writer is a Senior Journalist)