India Analysis: Spectrum auction September 2016

tower-india

 

The focus of this article is to give an in-depth view and analysis of the NIA in a concise manner for the benefit of our readers who might find it tedious to go through the entire length of the 167 page document. I have tried to highlight all the important aspects, the main one being the availability of spectrum in each band in each telecom circle.

Let us start with an overview of the auction 2016 timetable given in the table below.

Auction timetable
Issue     of     Notice     InvitingApplications (NIA) 8th Aug T=0
Pre-bid Conference By 13th Aug T+5
Last      date      for      seekingclarifications on NIA 19th Aug T+11
Clarifications to NIA 29th Aug T+21
Last  date  for  submission  ofApplications 13th Sept T+36
Publication      of      Ownershipdetails of Applicants 14th Sept T+37
Bidder  Ownership  ComplianceCertificate 16th Sept T+39
Pre-qualification of Bidders 19th Sept T+42
Last   date   of   withdrawal   ofapplications 22nd Sept T+45
Final List of bidders 23rd Sept T+46
Mock Auction 26th & 27th Sept T+49
Start of the Auction 29th Sept T+52
Payment of the Successful Bid

Amount

Within 10 calendardays of the issue of demand note
Venue and Date/ time of Pre Bid meeting will be notified on DoTwebsite separately

The mega spectrum auction is designed to put on sale a total of 2354.55 MHz of spectrum ranging across the 7 bands of 700 MHz, 850 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz. Let us consider the circle wise availability of spectrum in each of these bands in the upcoming auction.

700 MHz:

This is the first time that spectrum in this band is being auctioned in India. This corresponds to Band 28 and is useful for 4G FD-LTE deployment. The good indoor coverage offered by the better penetrative power of these airwaves is what makes it the most sought after band, but the lack of a mature device ecosystem coupled with high reserve price may lead to limited interest by the operators. The DoT has put up 35 MHz of paired spectrum in this band for sale in each of the 22 circles as 7 blocks of 5 MHz each. The details are given in the table below.

700 MHz Band
Block Size:5MHz (paired)
Name ofTelecom Circle

/ Metro LSA

Quantumon sale

(MHz) (paired)

No ofBlocks ReservePrice per

MHz

(Rs Cr)

ReservePrice per

Block

(Rs Cr)

EMD/Block

(Rs Cr)

EligibilityPoints/

Block

Andhra Pradesh 35 7 971 4855 480 3105
Assam 35 7 158 790 60 291
Bihar 35 7 248 1240 120 641
Delhi 35 7 1595 7975 480 3105
Gujarat 35 7 952 4760 480 3105
Haryana 35 7 186 930 120 641
HimachalPradesh 35 7 64 320 30 132
Jammu &Kashmir 35 7 52 260 30 132
Karnataka 35 7 740 3700 480 3105
Kerala 35 7 334 1670 240 1411
Kolkata 35 7 596 2980 240 1411
MadhyaPradesh 35 7 331 1655 240 1411
Maharashtra 35 7 1272 6360 480 3105
Mumbai 35 7 1192 5960 480 3105
North East 35 7 44 220 30 132
Odisha 35 7 152 760 60 291
Punjab 35 7 308 1540 240 1411
Rajasthan 35 7 364 1820 240 1411
Tamil Nadu 35 7 900 4500 480 3105
Uttar Pradesh(East) 35 7 459 2295 240 1411
Uttar Pradesh(West) 35 7 384 1920 240 1411
West Bengal 35 7 183 915 120 641

 

850 MHz:

This corresponds to band 5 which had traditionally been used for CDMA services in India but is now being refarmed to use for 4G FD-LTE. This offers similar indoor coverage like 700 MHz but has a more mature device ecosystem and lower reserve price, which is why it may see more bidders than 700 MHz band. The DoT has put up a cumulative total of 73.75 MHz of paired spectrum in this band across 19 circles in a block size of 1.25 MHz each. The details are given in the table below.

850 MHz Band
Block Size: 1.25MHz (paired)
Name ofTelecom Circle / Metro LSA Quantum on sale (MHz) (paired) No ofBlocks Reserve Price per MHz(Rs Cr) Reserve Price per Block(Rs Cr) EMD/ Block (RsCr) Eligibility Points/ Block
AndhraPradesh 7.5 6 606 757.5 60 291
Bihar 2.5 2 136 170 15 60
Delhi 2.5 2 848 1060 120 641
Gujarat 6.25 5 285 356.25 60 291
Haryana 1.25 1 57 71.25 7.5 27
HimachalPradesh 3.75 3 24 30 3 10
Karnataka 2.5 2 303 378.75 60 291
Kerala 2.5 2 243 303.75 30 132
Kolkata 2.5 2 160 200 30 132
MadhyaPradesh 2.5 2 408 510 60 291
Maharashtra 7.5 6 799 998.75 120 641
Mumbai 5 4 727 908.75 120 641
Odisha 3.75 3 57 71.25 7.5 27
Punjab 6.25 5 119 148.75 15 60
Rajasthan 7.5 6 204 255 30 132
TamilNadu 2.5 2 360 450 60 291
UttarPradesh

(East)

3.75 3 219 273.75 30 132
UttarPradesh

(West)

2.5 2 182 227.5 30 132
WestBengal 1.25 1 82 102.5 15 60

 

900 MHz:

This corresponds to band 8 and is used for GSM as well as 3G HSPA services. The 2015 auction saw the major sale of spectrum in this band as operators’ licenses came up for renewal. This time there isn’t much fresh spectrum in this band as no licenses are expiring and whatever is being put up for sale is what remained unsold from the last auction. A cumulative total of 9.4 MHz paired spectrum has been put up for sale across 4 circles in block sizes of 0.2 MHz each. The details are given in the table below.

900 MHz Band
Block Size: 0.2 MHz (paired)
Name ofTelecom

Circle / Metro

LSA

Quantumon sale (MHz) (paired) No ofBlocks ReservePrice Per MHz

(Rs Cr)

ReservePrice per Block

(Rs Cr)

EMD/Block

(Rs Cr)

EligibilityPoints/ Block
Bihar 4.6 23 444 88.8 15 60
Gujarat 3 15 673 134.6 15 60
Uttar Pradesh(East) 0.6 3 776 155.2 15 60
Uttar Pradesh(West) 1.2 6 739 147.8 15 60

 

1800 MHz:

This is the star spectrum of this auction and corresponds to band 3. A large amount of spectrum in this band has become available due to the harmonisation activity that DoT undertook with the Defence ministry freeing up over 200 MHz. This band is usable for GSM as well as 4G FD-LTE services. Due to the large device ecosystem supporting band 3 LTE and the low cost of contiguous spectrum, this band has chances of seeing very good demand in the upcoming auction. A cumulative total of 219.6 MHz paired spectrum has been put up for sale across 21 circles in block sizes of 0.2 MHz each. The details are given in the table below.

1800 MHz Band
Block Size: 0.2MHz(paired)
Name ofTelecom Circle

/ Metro LSA

Quantumon sale (MHz) (paired) No ofBlocks ReservePrice per MHz

(Rs Cr)

ReservePrice per

Block

(Rs Cr)

EMD/Block

(Rs Cr)

EligibilityPoints/ Block
Andhra Pradesh 4.4 22 243 48.6 7.5 27
Assam 18 90 40 8 1 3
Bihar 12.2 61 62 12.4 3 10
Delhi 12.8 64 399 79.8 7.5 27
Gujarat 13 65 238 47.6 7.5 27
Haryana 7.4 37 47 9.4 1 3
HimachalPradesh 11.4 57 16 3.2 0.5 1
Jammu &Kashmir 32 160 13 2.6 0.5 1
Karnataka 4.2 21 185 37 7.5 27
Kerala 2 10 83 16.6 3 10
Kolkata 4 20 149 29.8 3 10
MadhyaPradesh 4.6 23 83 16.6 3 10
Maharashtra 13.4 67 318 63.6 7.5 27
Mumbai 4.8 24 298 59.6 7.5 27
North East 9.2 46 11 2.2 0.5 1
Odisha 1.4 7 38 7.6 1 3
Punjab 15.4 77 77 15.4 3 10
Rajasthan 11 55 91 18.2 3 10
Uttar Pradesh(East) 5.4 27 115 23 3 10
Uttar Pradesh(West) 14.6 73 96 19.2 3 10
West Bengal 18.4 92 46 9.2 1 3

 

2100 MHz:

This corresponds to band 1 and has only been used for 3G HSPA services in India though it can also be used for 4G FD-LTE services in the future. This is the first time that abundant amount of spectrum in this band has been put up for auction, thanks to the spectrum swap deal signed between the DoT and Defence ministry which released 15 MHz Pan India spectrum. Since none of the major operators has a Pan India 3G footprint, this band may see good uptake in upcoming auction. 15 to 20 MHz of paired spectrum in this band has been put up for sale in all 22 circles in block sizes of 5 MHz each. The details are given in the table below.

2100 MHz Band
Block Size: 5 MHz (paired)
Name ofTelecom

Circle / Metro

LSA

Quantumon sale (MHz) (paired) No ofBlocks ReservePrice per MHz

(Rs Cr)

ReservePrice per Block

(Rs Cr)

EMD/Block

(Rs Cr)

EligibilityPoints/ Block
AndhraPradesh 20 4 272 1360 120 641
Assam 15 3 46 230 30 132
Bihar 20 4 86 430 60 291
Delhi 20 4 554 2770 240 1411
Gujarat 15 3 258 1290 120 641
Haryana 15 3 55 275 30 132
HimachalPradesh 20 4 20 100 15 60
Jammu &Kashmir 15 3 11 55 7.5 27
Karnataka 15 3 328 1640 240 1411
Kerala 15 3 177 885 120 641
Kolkata 15 3 116 580 60 291
MadhyaPradesh 15 3 123 615 60 291
Maharashtra 15 3 341 1705 240 1411
Mumbai 20 4 461 2305 240 1411
North East 15 3 12 60 7.5 27
Odisha 20 4 38 190 30 132
Punjab 15 3 91 455 60 291
Rajasthan 15 3 140 700 60 291
Tamil Nadu 15 3 344 1720 240 1411
Uttar Pradesh(East) 15 3 110 550 60 291
Uttar Pradesh(West) 15 3 111 555 60 291
West Bengal 15 3 52 260 30 132

 

2300 MHz:

This corresponds to band 40 and is used for 4G TD-LTE deployment in India. This band now has a very good device ecosystem in India and is desirable since large chunks of unpaired spectrum are available for much lower price than the sub 1 GHz bands. This is a capacity band which is used by operators to add bandwidth to their data services. 20 MHz unpaired spectrum in two blocks of 10 MHz each is available across 16 circles in the upcoming auction. The details are given in the table below.

2300 MHz Band
Block Size: 10 MHz unpaired
Name ofTelecom Circle / Metro LSA Quantumon sale (MHz) (unpaired) No ofBlocks of

10MHz

(unpaired)

ReservePrice per MHz

(Rs Cr)

ReservePrice per

Block

(Rs Cr)

EMD/Block

(Rs Cr)

EligibilityPoints/ Block
AndhraPradesh 20 2 68 680 60 291
Assam 20 2 2 20 3 10
Bihar 20 2 6 60 7.5 27
Delhi 20 2 143 1430 120 641
Gujarat 20 2 39 390 60 291
HimachalPradesh 20 2 1 10 1 3
Karnataka 20 2 98 980 120 641
Kerala 20 2 16 160 15 60
Kolkata 20 2 33 330 30 132
MadhyaPradesh 20 2 8 80 7.5 27
Maharashtra 20 2 58 580 60 291
Mumbai 20 2 146 1460 120 641
North East 20 2 1 10 1 3
Odisha 20 2 4 40 7.5 27
Tamil Nadu 20 2 132 1320 120 641
West Bengal 20 2 5 50 7.5 27

 

2500 MHz:

This corresponds to band 41 and just like band 40 this is also a capacity band used by operators to add to their bandwidth. As of now only one PSU operator holds spectrum in this band in 14 circles and it has denied participation in the upcoming auctions so it is unclear if this band will see any bidding at all, given its poorly developed device ecosystem and poor indoor coverage. 20 to 40 MHz of unpaired spectrum in blocks of 10 MHz each has been put up for sale in each of the 22 circles in the upcoming auction. The details are given in the table below.

2500 MHz Band
Block Size: 10 MHz unpaired
Name ofTelecom Circle / Metro LSA Quantumon sale (MHz) (unpaired) No ofBlocks ReservePrice per MHz

(Rs Cr)

ReservePrice per

Block

(Rs Cr)

EMD/Block

(Rs Cr)

EligibilityPoints/ Block
AndhraPradesh 40 4 68 680 60 291
Assam 20 2 2 20 3 10
Bihar 20 2 6 60 7.5 27
Delhi 40 4 143 1430 120 641
Gujarat 40 4 39 390 60 291
Haryana 20 2 8 80 7.5 27
HimachalPradesh 20 2 1 10 1 3
Jammu & Kashmir 20 2 1 10 1 3
Karnataka 40 4 98 980 120 641
Kerala 20 2 16 160 15 60
Kolkata 40 4 33 330 30 132
MadhyaPradesh 20 2 8 80 7.5 27
Maharashtra 40 4 58 580 60 291
Mumbai 40 4 146 1460 120 641
North East 20 2 1 10 1 3
Odisha 20 2 4 40 7.5 27
Punjab 20 2 21 210 30 132
Rajasthan 20 2 6 60 7.5 27
Tamil Nadu 40 4 132 1320 120 641
Uttar Pradesh(East) 20 2 9 90 15 60
Uttar Pradesh(West) 20 2 12 120 15 60
West Bengal 20 2 5 50 7.5 27

Each operator will also have to keep in mind the spectrum holding caps which dictate that an operator cannot hold more than 50% of the total spectrum available in any band in a circle and 25% of the cumulative spectrum across all frequency bands in a circle. The circle wise per band and total spectrum holding cap for operators is given in the table below. Also for the details on the amount of spectrum each operator currently holds in each band in each circle you can refer to our Pan India 2016 spectrum holding chart.

Band –wise spectrum holding Cap & Overall spectrum holding Cap for each LSA
Paired Spectrum (Total Spectrum Assigned for both sides of spectrum is taken into account) UnpairedSpectrum Overall Cap on Bidding for each Operator for each LSA.Total Spectrum Assigned for unpaired and both sides of spectrum in case of paired spectrum is taken into account Overall Cap for each Operator (in MHz)
700MHz 850MHz 900MHz 1800MHz 2100MHz 2300MHz 2500MHz
 

 

 

Name of Telecom Circle / Metro LSA

Cap on bidding for each Operator for each LSA in respective band.

 

 

 

 

 

 

Band -wise Cap for each Operator (in MHz)

AndhraPradesh 35.00 17.50 20.20 54.80 40.00 30.00 20.00 108.75
Assam 35.00 15.00 18.60 54.80 40.00 30.00 20.00 105.45
Bihar 35.00 18.75 18.60 54.80 40.00 30.00 20.00 108.58
Delhi 35.00 17.50 22.20 54.80 40.00 30.00 20.00 109.75
Gujarat 35.00 17.50 20.20 54.80 40.00 30.00 20.00 108.75
Haryana 35.00 17.50 18.40 54.80 40.00 20.00 20.00 102.85
HimachalPradesh 35.00 17.50 18.60 54.80 40.00 30.00 20.00 107.95
Jammu &Kashmir 35.00 12.50 18.60 54.80 40.00 20.00 20.00 100.45
Karnataka 35.00 17.50 20.00 54.80 40.00 30.00 20.00 108.65
Kerala 35.00 17.50 18.60 54.80 40.00 30.00 20.00 107.95
Kolkata 35.00 17.50 20.20 54.80 40.00 30.00 20.00 108.75
MadhyaPradesh 35.00 17.50 18.60 54.80 40.00 30.00 20.00 107.95
Maharashtra 35.00 17.50 20.20 54.80 40.00 30.00 20.00 108.75
Mumbai 35.00 17.50 22.20 54.80 40.00 30.00 20.00 109.75
North East 35.00 15.00 19.40 54.80 40.00 30.00 20.00 105.85
Orissa 35.00 17.50 18.60 54.80 40.00 30.00 20.00 107.95
Punjab 35.00 17.50 21.80 54.80 40.00 20.00 20.00 104.55
Rajasthan 35.00 17.50 18.60 54.80 40.00 20.00 20.00 102.95
Tamil Nadu 35.00 17.50 20.20 59.40 40.00 30.00 20.00 111.05
UtterPradesh

(East)

35.00 17.50 18.60 54.80 40.00 20.00 20.00 102.95
UtterPradesh

(West)

35.00 17.50 18.60 54.80 40.00 20.00 20.00 102.95
West Bengal 35.00 15.00 19.40 54.80 40.00 30.00 20.00 107.10

 

In the NIA, for the first time, the government has also promised to assign spectrum within 30 days of making an upfront payment by successful bidders, compared with four-five months earlier. While telecom operators winning spectrum in 700MHz, 800MHz and 900 MHz bands will have to pay at least 25% of the bid amount within 10 days of the conclusion of the auctions. The rest will have to be paid in 10 annual instalments after a two-year moratorium. For 1800 Mhz, 2100 MHz, 2300 Mhz and 2500 Mhz at least 50% of the bid amount will have to be paid upfront.

Unlike previous auction, this time Government has reduced the interest on instalments to 9.3 per cent from about 10 per cent. The lock-in period of spectrum holding by an operator before he can trade or share it is now one year from the date of spectrum allotment instead of two years in previous auction. This move will smoothen the process of consolidation. The government has fixed 3% of annual revenue as usage charge for spectrum acquired in the upcoming auction; for existing spectrum, a weighted average spectrum usage charge (SUC) has been fixed, with a floor price of 3%.

In our next article we present to you our predictions about participation by operators in the upcoming auction and which spectrum band they are most likely to bid for in which licensed service area (circle). Till then keep reading TelecomTalk and also express your views and opinions through the comments section below.

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