Videocon Telecom, the telecom operator with the lowest number of active connections in India, has said that it plans to bid for the 900 Mhz license for Delhi, finding the reserve floor price of spectrum for 900 MHz very attractive. This statement comes shortly after a report suggesting that the Planning Commission supports the Telecom regulator TRAI’s proposal of bringing the base price of 900 MHz auctions in Delhi, Mumbai and Kolkata down by 60%, following two attempts at auctions that failed.
In that context, Videocon is getting ahead of itself, given that this policy recommendation from the TRAI hasn’t yet quite completed the dreaded Indian-government-policy-finalization-obstacle-course. Or maybe they know something we don’t.
Videocon has appointed Deloitte to formulate their business plan and rollout strategy for Delhi. It currently operates in 3 out of 6 license areas for which it acquired spectrum in the auctions in November 2012, and plans to roll out operations in the nremaining three circles in the next 12 months. The company is looking at 900 MHz as an opportunity to roll out “next generation data service”, probably referring to 3G services. 900 MHz is believed to be more efficient than the 1800 MHz that many telcos are operating in, and along-with Mumbai, Delhi is a key city, when it comes to revenue: it is also the second most populous city in India, the Delhi-NCR is the largest city by area. Not many telecom operators have so far received spectrum for Delhi, and even with a low base price, the circle will attract competition.
As of June 2013, Videocon had 2,417,933 connections: 702,642 in Gujarat, 852,520 in Haryana, and 862,831 in Madhya Pradesh. India has 22 circles of operation. Around 57.22% of Videocon’s mobile connections – a total of 1,383,576 connections – are active. It has yet to launch operations in Bihar, UP East and UP West.
All in all, India has 870.19 million connections, and around 731.44 million of them active. Videocon has a long way to go.
The TRAI recommended that the reserve price for the 900 MHz spectrum for Delhi, Mumbai and Kolkata circle be reduced by 60% to Rs 288 crore, Rs 262 crore, and Rs 100 crore respectively. The 900 MHz band is more important as it can be used for 3G services.
Note that licenses 900 MHz band of leading telecom operators in such as Vodafone and Airtel are up for renewal next year. More on that recommendation here.