Indian telecom sector will see the latest round of spectrum auction on Monday. Presence of Reliance Jio Infocomm for 2G spectrum and the need for airwaves in Delhi, Mumbai and Kolkata by Bharti and Vodafone India is likely to see tough competition.
Indian politicians and bureaucrats forced local telecoms to attend the third spectrum auction in the last 18 months. The spectrum auction in November 2012 and March 2013 did not receive enough response to the government, which is looking at achieving financial targets through the auction.
But auction in 2010 attracted solid response from telecoms mainly due to the wrong calculations by several telecoms and the presence of Mukesh Ambani, promoter of Reliance Industries, for buying BWA (broadband wireless access) spectrum. It’s unfortunate that Reliance Jio Infocomm for the last four years has been sitting on BWA spectrum without launching the service.
But the investments in the BWA (for 4G services) and 3G during the 2010 spectrum auction failed to re-energize the telecom operators. In 2010, telecom operators invested around Rs 1 lakh crore for spectrum alone. Bharti Airtel, which invested in both 3G and 4G, posted an increase in quarterly net profit after 15 quarters.
During the turbulent times followed by the February 2012 Supreme Court verdict, several foreign telecom operators exited the Indian mobile service provider market, which is currently dominated by Bharti Airtel. The February 2012 Supreme Court order almost killed the Indian telecom journey. Several thousands of people lost their job.
Interesting aspect is the lack of interest among leading telecoms in investing in the Indian telecom market. Several telecoms from Europe, Middle East and Africa are looking for telecom assets, but India is not on their radar.
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Indian spectrum auction has become a money making tool for the telecom ministry to achieve its financial targets. The possible exit of the Tatas from Tata Communications and Tata Teleservices shows the viability of the telecom sector.
If MTS India is unable to participate in the CDMA spectrum sell off, and the decision to pull out from the auction by Videocon Telecom reflect lack of ability of DoT and the telecom minister Kapil Sibal to revive the market. TRAI, Indian telecom regulator, has continue to play the role of a silent spectator in the entire discussion and not a decision maker.
For TRAI, telecom operators’ dropped calls, poor quality of services, less transparent bills, etc. has become a part of their quarterly reporting. Operators are free to make money from their services without investing enough for telecom infrastructure.
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From Monday, India will conduct two sets of auctions, one for nationwide use of the 1800 MHz frequency and another to offer cellular-phone services using the 900 MHz frequency in the megacities of Mumbai, Delhi and Kolkata.
According to the new industry market study, telecom services revenue worldwide will grow from $2.1 trillion in 2014 to $2.4 trillion in 2019 at a combined average growth rate of 2.1 percent. But India is small market for several telecom giants.
Pix source: The Hindu
Baburajan K
editor@telecomlead.com
