The telecom spectrum auction finally concluded Wednesday after 19 days and 115 rounds. The government has garnered over Rs 1 lakh crore at the close of bidding, however 11 percent airwaves stayed unsold.
According to sources, the spectrum auction payout by various companies stand at -- Vodafone likely to be at Rs 34,500 crore, Bharti Airtel at around Rs 27,500 crore, Idea (Rs 28,000 crore), Reliance Jio (Rs 11,000 crore) and Reliance Communications (Rs 2,300 crore).
Terming the auction outcome as satisfactory with the companies showing faith in the government, sources said now spectrum sharing and trading guidelines are being worked upon.
The telecom companies have 10 days to make earnest money deposit. The government will disclose names of provisional winners post Supreme Court hearing.
GV Giri of IIFL expects the mainstream telecommunications company (telcos) to largely retain at least the minimum spectrum in their renewal circles. "I expect based on the information disclosed in the last three weeks by department of telecommunications (DoT) that Bharti would have increased their spectrum holdings in a few circles and I would expect that Idea has at least managed to get the minimum of 5 Mhz assured for itself," he said.
Giri said that the auction has come at a steep price and therefore smaller companies will be burdened. "There could also be a few cases of companies losing out on their 900 Mhz because there was not enough of it or the price was too steep or the bidding was just too competitive," he said.
He believes the market might start paying a lot more attention to 900 Mhz 3G as a differentiator between operators as "sooner or later the operators who have paid big money for the spectrum will start putting it to use in the best possible way which is to use it for data".
"Overall if after the Supreme Court hears this case starting tomorrow, the judgement concludes with the auction considered valid and if the results seem to say that our current guesses and estimates are by-and-large accurate then the market will react very positively," he added.
Sanjay Kapoor, Chairman, Micromax, feels that every operator now will breathe a sigh of relief as the auction is finally over. The strategy now going forward is what everybody curiosity will be around. "Absolutely people have probably retained the spectrum that they wanted to and some have enhanced the spectrum pool as they wanted to stay ahead in the game on data. Now how much a price rise will be required to make up for this deficit or investment that everybody has made needs to be seen," he said.
Companies with smaller balance sheets that have put in lot of money will face the challenge that will come across in their strategy, said Kapoor. "Idea has always grown incrementally over the past so many years. It is the first time that it is spending as much money as the big operators are doing in the same auction. For them to see what the strategy going forward will be both on price rise on reforming of spectrum is something which is to be seen," he said.
From a share market perspective, Idea and Airtel have a tougher job because they are listed companies and therefore they have to be answerable, said Kapoor. "Vodafone is a non listed company in India and therefore this investment will not be questioned as much as for Airtel and Idea. But I think if Vodafone has spent more than these guys than clearly Vodafone is garnering more spectrum which means they are creating more capacity," he said.
SC Khanna, Former Secretary general at AUSPI thinks telcos do not have much choice as once the Supreme Court says that natural resources have to be auctioned, they have to be auctioned.
Discussing a possible price rise, Khanna said that big companies like Bharti, Idea are already much debt-ridden and they have only one choice left -- to marginally increase the tax. "This will definitely affect the tariffs and no competitor can stand if the tariffs do not go up. The tariffs will go up I cannot say what percentage, that can be only seen once everything is made public," he said. Khanna feels the government may not object if the operators join for inter-circle roaming.
With the spectrum asset that telcos have and their stated strategy of providing broadband to every home and every individual, the companies are going to be fairly competitive as broadband penetration in India is still very low, said Prashant Singhal, National Telecom Leader, EY.
"I do not know the results of the auction, but clearly this market is where consolidation is imminent. There would be 5-6 operator markets so we would see that some of the middle players or some of these smaller players would consolidate. Now whether they consolidate among themselves or they consolidate with the larger player is yet to be seen," he said.
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