COAI Dismayed Over Exorbitant Winning Price Points at Latest Spectrum Auctions in India


COAI, the Mobile Communications Association representing seven of the largest mobile service Operators and the majority of telecom equipment manufacturers, expressed disappointment over the exorbitant winning price points for the operators at the latest spectrum auctions.

While the auction process is completed, the final result of the auction will be held in abeyance till the Hon’ble Supreme Court hears the various cases involved and opines on the outcome of the auction. The hearing for the same is scheduled on 26th March 2015.

It is pertinent to note that even the TRAI, in its recommendation, had highlighted the fact that, the structure of the auction, without the proper safeguard would lead to exorbitant bids. Likewise, the way the Government structured the final auction, guaranteed that the maximum revenue be extracted from the industry. The above point was highlighted by the TRAI stating that “the upcoming auction is critical for the Telecom Service Providers (TSPs) whose licences are due to expire in 2015-16.

In the 900 MHz band, only the spectrum held by them is available for the auction. These licensees will have to win back this spectrum to ensure business continuity in a Licence Service Area (LSA); if they don’t, it places the
large investment made in the LSAs in jeopardy.” Apart from the 2100 MHz band, all other spectrum bands auctioned were in-use spectrum and were being re-auctioned due to non-extension of licences.

Hence, aggressive bidding from the operators, especially for the 900 MHz spectrum, was inevitable. “The outcome of this auction, in whichever manner, will eventually lead to a significant outflow of funds and further burden the industry, which already remains under a debt of INR 2.5 lakh crores. In terms of
meeting the government objectives of NTP 2012 and the Digital India initiative, it will have to be seen if the operators are left with the requisite financial resources to invest in networks and marketing after bearing the high spectrum costs. The increased financial burden will lead to the industry’s cost structure
being changed drastically. Hence, the operators will not be left with much choice but to increase the tariffs so as to meet the financial commitments to the government. We are awaiting official details of the results with the list of the winners, to understand and figure out the way ahead hereon,” said Rajan
S. Mathews, Director General, COAI.

The Government has garnered about 1,10,000 crore for the Government from the operators on account of the airwaves sold in the auction. In comparison to the INR 82,000 crore expected by the Government to be generated from this auction, there has been almost a 33% hike in the realized prices.