Indian operators could spend a combined 1 trillion rupees ($14.8 billion) buying spectrum in the nation's upcoming massive auction, according to credit ratings agency Crisil.
The agency expects “healthy” participation in the bidding as operators prepare for new competition and seek to mitigate congestion issues.
But Crisil still expects the auction to fall below government expectations - in the current fiscal year Crisil expects a total spectrum outlay of 370 billion rupees, lower than the budget estimates of 560 billion. The government has predicted it will raise up to $83 billion from the auction.
“Unlike previous auctions, operators this time do not face business continuity issues. Yet we expect reasonably healthy participation because incumbents will ramp up their 3G and 4G spectrum holdings ahead of Reliance Jio’s entry,” Crisil Research director Ajay Srinivasan commented.
“Telcos are already facing increased network congestion in circles with high data consumption (mainly metros and Category A circles, which account for some 60% of India’s data traffic), and therefore, augmenting network capacity and spectrum holdings will be critical for maintaining their competitive position.”
But he added that only part of the 2,300 MHz of airwaves across seven frequency bands due to be put on the block in the upcoming auction is likely to be sold.
Crisil expects only a small part of the expensive 700-MHz airwaves to be sold, with operators preferring the more affordable 1800-MHz band.
The agency predicts that about half of the 1800-MHz and 2100-MHz spectrum and most of the spectrum in the 800-MHz and 900-MHz band to be sold. Bidding interest in the 2300-MHz and 2500-MHz band is by contrast expected to be limited.
India's top three telcos Bharti Airtel, Vodafone India and Idea Cellular - are expected to account for 55% to 60% of total spending at the auctions, Crisil added. Private operators are expected to contribute 75% of the total.