Operators Bharti Airtel and Reliance Jio Infocomm need the spectrum and the Indian government needs the money. Thus the Indian 4G spectrum auction should be going ahead soon. But will all the spectrum be sold?
Bharti and Jio are facing a surge in demand for data and voice services, and the expiration of permits next year in some of the administrative areas known as circles. The government, in turn, requires the auction proceeds to meet spiralling expenditure needs amid the coronavirus crisis.
It will still take a month or more to put into effect but the Indian government is apparently speeding up plans to auction 4G spectrum that is worth close to $53 billion at present exchange rates.
The 4G airwaves to be sold are in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands. Some of these could also be used for 5G at a later stage, although actual 5G bandwidth sales have been postponed until next year at the earliest.
But analysts aren’t convinced it will all be sold. High operator debt levels and the likely absence of financially troubled Vodafone Idea from the auction may not help. Also the main operator focus is expected to be on the 800 MHz and 1800 MHz bands, where some permits are due to expire soon.
That leaves a lot of spectrum that may not be sold. Don’t forget, the 700 MHz band spectrum was put to auction in October 2016, where it went unsold. This could happen again. In addition, a staggered payment system means the government could be waiting quite a long time for its revenue after the auctions.
It certainly looks as though the 4G auctions will not be the financial bonanza the government may have hoped for. And the prospects for the 5G auctions are hardly encouraging, even with a year or more to go before they actually take place.